Job costing; actual, normal, and variation of normal costing. Vista Group provides architectural services for residential and business clients. It employs 25 professionals. Its job-costing system has a single direct-cost category (professional labour) and a single indirect-cost pool (client support, which contains all the costs in the Client $upport Department). Client support costs are allocated to individual jobs using actual profes¬

sional labour-hours.

Budgeted and actual amounts for 2007 are as follows:

Budget for 2007 Professional labour compensation Client Support Department costs Professional labour-hours billed to clients Actual Results for 2007 Client Support Department costs Professional labour-hours billed to clients

$4,800,000

$3,120,000 40,000 hours

$2,923,200 42,000 hours Actual professional labour-cost rate is $132 per hour.

Required 1. Identify the direct-cost rate per professional labour-hour and the indirect-cost rate per pro¬

fessional labour-hour for 2007 under

(a) actual costing,

(b) normal costing, and

(c) variation normal costing that uses budgeted rates for direct costs.

2. In 2007, the Vista Group designed a new retirement village in Victoria, British Columbia, for Carefree Years, Inc. Vista budgeted to spend 1,500 professional labourhours on the project. Actual professional labour-hours spent were 1,720. Compute the job cost of the Carefree Years project using

(a) actual costing,

(b) normal costing, and

(c) variation of normal costing that uses budgeted rates for direct costs. Explain any differences.

PROBLEMS