Job costing, normal and actual costing. (20 minutes) Idergard, AB, assembles residential homes. It uses a job-costing system with two directcost categories (direct materials and direct labour) and one indirect-cost pool (assembly support). Direct labourhours is the allocation base for assembly support costs. In December 1999, Peterson budgets 2000 assembly support costs to be SKr 8,000,000 and 2000 direct labourhours to be 160,000.

At the end of 2000, Idergard is comparing the costs of several jobs that were started and completed in 2000.

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 2000 actual assembly support costs were SKr 6,888,000 while the actual direct labour-hours were 164,000.

REQUIRED 1. Calculate the

(a) budgeted and

(b) actual indirect-cost rates. Why do they differ?
2. What is the job cost of the Mora Model and the Solna Model using

(a) normal costing and

(b) actual costing?
3. Why might Idergard Construction prefer normal costing over actual costing? lo1

Transcribed Image Text:

CONSTRUCTION PERIOD Direct materials Direct labour Direct labour-hours MORA MODEL FEBRUARY-JUNE 2000 SKr 106,450 SKr 36,276 900 SOLNA MODEL MAY-OCTOBER 2000 SKr 127,604 SKr 41,410 1,010