Baingana pool builders installs residential swimming pools and uses a job costing system with two direct cost categories and one overhead cost pool. Direct labor hours is the cost driver for overhead costs. For 2011, the company budgeted overhead costs to be $7,000,000 and estimated direct labor hours at 175,000. At the end of 2011, the company is comparing the costs of several jobs started and completed this year.

Job1 Job 2

Direct Materials $100,000 $125,000

Direct Labor $ 35,000 $ 40,000

Direct Labor hours 900 1100

Building period may-june may-july

Direct materials and direct labor are contracted before the pools are installed. The 2011 overhead costs were $7,200,000 and the actual direct labor hours in 2011 were 160,000.

a. compute budgeted overhead rate and actual indirect cost rate

b. Compute the overhead costs for each job using a) normal costing and b.) actual costing

d. compute the costs of both jobs using a) normal costing and b.) actual costing