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 allocation base for assembly support costs. In December 2016, Anderson budgets 2017 assembly-support costs to be $8,300,000 and 2017 direct labor-hours to be 166,000. At the end of 2017, Anderson is comparing costs of several jobs that were started and completed in 2017. Click the icon to view the data.) Read the requirements Requirement 1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ? Identify the formula to calculate the budgeted indirect cost rate and then calculate the rate. Budgeted indirect cost rate per DLH Identify the formula to calculate the actual indirect cost rate and then calculate the rate. = Actual indirect cost rate 4 per DLH These rates differ because X per DLH Requirement 2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing? (a) Identify the formula to calculate the indirect costs under normal costing and then calculate the indirect costs for each model. (Normal costing) Indirect costs Laguna Mission per DLH Now calculate the total costs using normal costing for each model Laguna Mission Normal costing model model Total costs (b) Identify the formula to calculate the indirect costs under actual costing and then calculate the indirect costs for each model. (Actual costing) Indirect costs Laguna per DLH X Mission per DLH X Now calculate the total costs using actual costing for each model. Laguna Mission Actual Costing Model Model Total costs Requirement 3. Why might Anderson Construction prefer normal costing over actual costing? Anderson Construction might prefer normal costing over actual costing because normal costing Anderson can use this information to 2 Data Table Laguna Model Mission Model Construction period Feb-June 2017 May-Oct 2017 Direct materials costs $ 106,250 $ 127,125 Direct labor costs $ 36,276 $ 41,860 Direct labor-hours 950 1,060 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 2017 actual assembly-support costs were $6,888,000, and the actual direct labor-hours were 164,000