Jo Compute the cost ofJob 626 using

(a) an actual-costing system and

(b) a normal-costing system.

At the end of 2007, compute the under- or overallocated manufacturing overhead under Destin’s normal costing system. Why is there no under- or overallocated overhead under Destin’s actual-costing system?

omment briefly on the advantages and disadvantages of actual-costing and normal-costing stems.

ib costing, normal and actual costing. Anderson Construction assembles residential homes. It uses a job-costing system with two direct-cost categories (direct materials and direct labour) and one indirect-cost pool (assembly support). Direct labour-hours is the allo¬

cation base for assembly support costs. In December 2007, Anderson budgets 2007 assembly support costs to be $9,600,000 and 2007 direct labour-hours to be 160,000.

At the end of 2007, Anderson is comparing the costs of several jobs that were started and completed in 2007.
Laguna Model Mission Model Construction Period February-June 2007 May-October 2007 Direct materials $127,740 $153,125 Direct labour $43,531 $49,692 Direct labour-hours 900 1,010 Direct materials and direct labour are paid for on a contract basis. The costs of each are known when direct materials are used or direct labour-hours are worked. The 2007 actual assembly support costs were $8,265,000, while the actual direct labour-hours were 164,000.
Required 1. Compute the

(a) budgeted and

(b) actual indirect cost rate. Why do they differ?
2. What is the job cost ofthe Laguna Model and the Mission Model using

(a) normal costing and

(b) actual costing?
3. Why might Anderson Construction prefer normal costing over actual costing?