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Avery 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).
Avery 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, Avery budgets 2017 assembly-support costs to be $8,300,000 and 2017 direct labor-hours to be 166,000. At the end of 2017, Avery is comparing the costs of several jobs that were started and completed in 2017. B (Click the icon to view the data.) Data Table Read the requirements. Construction period Feb-June 2017 Ivay-Oct 2017 127,970 Direct materials costs $ 106,430 $ Mission Direct labor costs $ 36,875 $ 41,520 per DLH Direct labor-hours 910 1,090 Now calculate the total costs using actual costing for each model. Mission Laguna Model 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 $6,520,000, and the actual direct labor-hours were 163,000. Actual Costing Model Total costs Print Done Requirement 3. Why might Avery Construction prefer normal costing over actual costing? Avery Construction might prefer normal costing over actual costing because normal costing Avery can use this information to
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