4-29 Job costing, variation on actual, normal, and variation from normal costing. Creative Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing tabor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Creative Solutions follows: Budget for 2014: Direct labor costs $273,000 Direct labor-hours 10,500 Overhead costs $157,500 Actual results for 2014: Direct labor costs $285,000 Direct labor hours 11,400 Overhead costs $159,600 1. Compute the direct cost rate and the indirect cost rate per Web designing labor hour for 2014 under (a) actual costing. (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs 2. Which method would you suggest Creative Solutions use? Explain. 3. Creative Solutions' Web design for Greenville Day School was budgeted to take 86 direct labor-hours. The actual time spent on the project was 79 hours. Compute the cost of the Greenville Day School job using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct cost. A Styles 2 St P. 2 6 7 8 9 10 11 12 13 14 15 16 17 Assignment-01 Mr.Kareem commences his business on Jan, 1, 20x1 with the following assets under the name and style 'AL Kareem Consulting & Co. a VAT Consulting business, Cash AED 50000; Motor Car AED 50000; Furniture AED 10000 Review of the book of Al Kareem Consulting & Co., for the month Jan, 20x1 reveals the following. Date Transaction / Event 01 Employs two assistants, who will be paid salary of 5000 each per month. 02 Deposits 20000 and opens a Checking account with ENBD. 03 Buys Stationery for 200; Takes an office on lease and enters into Lease Agreement with Landlord and pays 5000 as security deposit. Rent of the office is 2000 per month, payable at the end of each month. 04 Pays 1000 towards VAT Training Programs to be attended by his VAT Assistants. 05 Fills his car fuel tank. Fuel cost 100. Bought a Lenovo Laptop for AED 2500. 07 Completes some professional work for few of his clients, VAT Registration service rendered AED 5000. Tax Return Service AED 15000. Fees relating to VAT Registration Service have been collected in cash. Customers to whom VAT Return Service was rendered are: Ford Motors: 3000; Lulu 5000, Etisalat: 2000; DEWA: 2000 Others: 3000 Service to Etisalat and DEWA were rendered on account. Incurs Legal Expenses 2000 31 Service rendered to other clients during the month. VAT Registration: 20000 VAT Return Service 10000 and VAT Consulting 10000. VAT Registration and VAT consultation service were rendered against Cash. 31 SEWA for the month amounts to 700, paid in cash. Salaries were paid. Rent is due by the end of the month. Stationery and other office expenses amounting to 500 and 750 were paid in Cash. Analyse the transactions and prepare a Table showing the impact of the transactions in Terms of Cash, Other Assets, Liabilities, Equity, Revenue and Expenses