Question
Paper Crea7ons (PC) makes design-specific invitations and announcements for customers. The companys job-costing system has a single direct cost category: design labour hours. PC also
Paper Crea7ons (PC) makes design-specific invitations and announcements for customers. The companys job-costing system has a single direct cost category: design labour hours. PC also has one indirect cost pool which contains all of the companys overhead costs. PC allocates overhead based on direct labour-hours. You have been given the following informa7on: Budget for the year Actuals for the year Direct-labour costs $300,000 $350,000 Direct labour hours 8,000 9,200 Overhead costs $125,000 $130,000 ** Your work should round to 2 decimal places. 1. Compute the direct-cost rate and the indirect-cost rate per design labour-hour for the year under (a) actual costing, (b) normal costing, and (c) the variation of normal costing that uses budgeted rates for direct costs.
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