Andrews 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 2016, Andrews budgets 2017 assembly-support costs to be $8,300,000 and 2017 direct labor-hours to be 166,000. At the end of 2017, Andrews is comparing the costs of several jobs that were started and completed in 2017 E (Click the icon to view the data.) Data Table Read the requirements. $ 8,300,000 166,000 50 per DLH Identify the formula to calculate the actual indirect cost rate and then calculate the rate. Actual indirect costs 8,016,000 Actual direct labor hours 167,000 Actual indirect cost rate 48 per DLH $ 1 = S These rates differ because both the cost and hour amounts in the two calculations are different 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) Budgeted indirect cost rate X Actual direct labor hours Indirect costs S Laguna 50 por DLH x 960 48,000 Mission S 50 per DLH 1,060 53,000 Laguna Model Mission Model Construction period Feb-June 2017 May-Oct 2017 Direct materials costs S 106.430 $ 127,325 Direct labor costs S 36.250 $ 41,320 Direct labor-hours 960 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 $8,016,000, and the actual direct labor-hours were 167,000. Print Done Now calculate the total costs using normal cosling for each model. i Requirements Laguna model Mission model Normal costing Direct costs Indirect costs $ 221,645 190,680 $ 1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ? 2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing? 3. Why might Andrews Construction prefer normal costing over actual costing? Total costs Choose from any list or enter any number in the input fields and then click Check Answer. Print parts Done 4 4 remaining Clear All Andrews 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 2016, Andrews budgets 2017 assembly support costs to be 58,300,000 and 2017 direct labor-hours to be 166,000. At the end of 2017, Andrews is comparing the costs of several jobs that were started and completed in 2017 E: (Click the icon to view the data.) Data Table Read the requirements Laguna Model Mission Model 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 costs Budgeted direct labor hours Budgeted indirect cost rate $ 8,300,000 166,000 S 50 per DLH Feb-June 2017 May-Oct 2017 127,325 Construction period Direct materials costs Direct labor costs Direct labor-hours S S S 106.430 $ 36 250 $ 960 41,320 1,060 Identify the formula to calculate the actual indirect cost rate and then calculate the rate Actual Indirect costs 1 Actual direct labor hours $ 8,016,000 167,000 = Actual indirect cost rate 48 per DLH S 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 $8,016,000, and the actual direct labor-hours were 167,000. These rates differ because both the cost and hour amounts in the two calculations are different. Print Done Requirement 2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing? (a) Identity the formula to calculate the indirect costs under normal costing and then calculate the indirect costs for each model. (Normal costing) Budgeted indirect cost rate Actual direct labor hours Indirect costs S Laguna 50 per DLH X 960 48,000 Mission S 50 per DLH X 1,060 53,000 A Requirements Now calculate the total costs using normal costing for each model. Mission Laguna HARA 1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ? 2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing? 3. Why might Andrews Construction prefer normal costing over actual costing? Choose from any liat or enter any number in the input fields and then click Check Answer. Print Done 4 4 remaining parts Clear All