5-17 Job costing, normal and actual costing Stegline Construction builds units in retirement complexes in remote communities. It uses a job-costing system with two direct cost categories {direct materials and direct labour) and two indirect cost pools (building support and logistics). Direct labour-hours is the allocation base for building-support costs and direct materials costs is the allocation base for logistics. In December 2013, Stegline Construction budgets 2014 buildingsupport costs to be $5,800,000, logistics costs to be $2,500,000, direct labour-hours to be 160,000 and direct materials costs to be $80,000,000. At the end of 2014, Stegline is comparing the costs of several jobs that were started and completed in 2014: Sunrise model Sunset model Construction period FebJ1me 2014 May-Oct 2014 Direct materials costs $106,450 $127,604 Direct labour costs $36,276 $41,410 Direct labour-hours 900 1010 Direct materials and direct labour are paid for on a contract basis. The costs of each are known when direct materials are used or when direct labour-hours were 164,200 and actual direct materials costs were $82,500,000. Required 1. Calculate: (a) the budgeted indirect cost rate and (b) actual indirect cost rate. 'Why do they differ? 2. What are the job costs of the Slmrise model and the Sunset model using: (a) normal costing and (b) actual costing? 3. Why might Stegline Construction prefer normal costing over actual costing