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4-18 Job costing, normal and actual costing. Anderson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct

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4-18 Job costing, normal and actual costing. Anderson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Direct labor-hours is the allocation base for assembly support costs. In December 2013, Anderson budgets 2014 assembly-support costs to be $8,000,000 and 2014 direct labor- hours to be 160,000. At the end of 2014, Anderson is comparing the costs of several jobs that were started and completed in 2014. Construction period Direct material costs Direct labor costs Direct labor-hours Laguna Model Feb-June 2014 $106,650 S 36,276 Mission Model May-Oct 2014 $127,970 $ 41,750 1,040 920 Direct materials and direct labor are paid for on a contract basis. The costs of each are known when direct materials are used or when direct labor-hours are worked. The 2014 actual assembly-support costs were $7,614,000, and the actual direct labor-hours were 162,000. ASSIGNN Inventory balances on December 31, 2014, were as follows: Account Work in process Finished goods Cost of goods sold Ending balance $ 50,700 245,050 549,250 2014 direct manufacturing labor cost in ending balance $ 20,520 59,280 148,200 1. Calculate the manufacturing overhead allocation rate. 2. Compute the amount of under-or overallocated manufacturing overhead. 3. Calculate the ending balances in work in process, finished goods, and cost of goods sold if under-or overallocated manufacturing overhead is as follows: a. Written off to cost of goods sold b. Prorated based on ending balances (before proration) in each of the three accounts c. Prorated based on the overhead allocated in 2014 in the ending balances (before proration) in each of the three accounts 4. Which method would you choose? Justify your

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