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, 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 the 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 (1) (2) - 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 per DLH These rates differ because (5) 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) (6) ( - Indirect costs Laguna Mission x per DLH * per DLH XL Now calculate the total costs using normal costing for each model Laguna Mission Normal costing model model (8) 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) (10) XC (11) Indirect costs Laguna per DLH = Mission per DLH X E Now calculate the total costs using actual costing for each model. Mission Actual Coating Laguna Model (13) Total costs Requirement 3. Why might Anderson Construction prefer normal costing over actual costing? Anderson Anderson Construction might prefer normal costing over actual costing because normal costing (14) can use this information to (15) 1: Data Table Construction period Direct materials costs Direct labor costs Direct labor-hours Laguna Model Feb-June 2017 106,350 $ 36,875 $ 980 Mission Model May-Oct 2017 127,825 41.410 1,070 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 $7.425,000, and the actual direct Inbor-hours were 165.000 2. Requirements 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 Anderson Construction prefer normal costing over actual costing? (1) O Actual direct costs Actual direct labor hours Actual indirect costs O Budgeted direct costs Budgeted direct labor hours O Budgeted indirect costs (2) O Actual direct costs Actual direct labor hours Actual indirect costs O Budgeted direct costs Budgeted direct labor hours O Budgeted indirect costs (3) O Actual direct costs Actual direct labor hours Actual indirect costs O Budgeted direct costs O Budgeted direct labor hours O Budgeted indirect costs Actual direct costs Actual direct labor hours O Actual indirect costs O Budgeted direct costs O Budgeted direct labor hours O Budgeted indirect costs (5) O both the cost and hour amounts in the two calculations are different O the cost amounts in the two calculations are different O the hour amounts in the two calculations are different O Budgeted indirect cost rate (6) O Actual direct cost rate O Actual indirect cost rate O Budgeted direct cost rate O Budgeted direct labor hours (7) O O Actual direct labor costs O Actual direct labor hours O Budgeted direct labor costs (8) O O Indirect costs O Actual costo Variable costs Direct costs O Fixed costs Budgeted indirect cost rate Indirect costs Variable costs (9) O O Actual cost Direct costs Fixed costs (10) O Actual direct cost rate O Actual indirect cost rate O Budgeted direct cost rate O Budgeted direct labor hours Indirect cost Variable cos (11) O O Actual direct labor costs O Actual direct labor hours O Budgeted direct labor costs (12) O O Actual cost O Direct costs Fixed costs Indirect costs Variable costs (13) O Actual cost Direct costs O Fixed costs (14) O enables Anderson to report a job cost as soon as the job is completed. O provides more accurate cost data, O results in higher profits. (15) O evaluate previous years earnings. O manage the cost of their current jobs and bid on similar jobs later in the year
