Amesbury

Construction assembles residential homes. It uses a job-costing system with two direct cost categories (direct materials and direct labour) and one indirect cost pool (assembly support). The allocation base for assembly support costs is direct labour-hours. In December

2018, Amesbury budgets 2019 assembly support costs to be $8,160,000 and 2019 direct labour-hours to be 170,000. At the end of 2019, Anderson is comparing the costs of several jobs that were started and completed in2019. Information for a couple of jobs follows:

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 2019 actual assembly support costs were 6,232,000, while the actual direct labour-hours were 164,000.

Construction Period

Laguna Model

February-June 2019, Direct materials $105,620, Direct labour, $34,109, direct labour hours 860

Mission Model

May-October 2019, Direct materials,$126,522, Direct labour, $39,920 direct labour hours, 990

1 What is the job cost of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing?

2 Why might Amesbury Construction prefer normal costing over actual costing?