Elin Saunders, of Lawn Pro Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. Lawn Pro estimated the following for the year:

Required:
1. Should Lawn Pro use process costing or job-order costing? Explain.
2. If Lawn Pro uses a normal costing system and overhead is applied on the basis of direct labor hours, what is the cost of an installation that takes $3,500 of direct materials and 30 direct labor hours?
3. Explain why Lawn Pro would have difficulty using an actual costing system.LO1

Transcribed Image Text:

Number of installations 340 Number of direct labor hours 5,440 Direct material cost $102,000 Direct labor cost $54,400 Overhead cost $59,840 During the year, the following actual amounts were experienced: Number of installations Number of direct labor hours Direct materials used Direct labor incurred Overhead incurred 290 4,350 $87,000 $43,500 $53,460