QUESTION 3 Job costing (30 marks) Home Construction Ltd builds units in retirement complexes in remote communities. It uses a job- costing system with two direct-cost categories (direct materials and direct labour) and two indirect- cost pools (building support and logistics). Direct labour-hours is the cost driver for building- support costs and direct materials costs is the cost driver for logistics. In December 2018, Home Construction budgets 2019 building-support costs to be $8 800 000, and direct labour-hours to be 220 000. At the end of 2019, management is comparing the costs of several jobs that were started and completed in 2019: Grandvista model Sunnylook model Construction period Feb-June 2019 May-Oct 2019 Direct materials costs $106 550 $127 450 Direct labour costs $ 36 250 $ 41 130 Direct labour-hours 970 1 000 Direct materials and direct labour are paid for on a contract basis. The costs of each are known when direct materials are used or when direct labour-hours are worked. The 2019 actual building- support costs were $8 525 000, the actual direct labour-hours were 155 000 and actual direct materials costs were $82 500 000. Required 1. Calculate: (a) the budgeted cost-driver rate and (b) the actual cost-driver rate. Explain the difference between them. 2. Calculate the job costs of the Grandvista model and the Sunnylook model using: (a) normal costing and (b) actual costing. 3. Explain why managers might prefer normal costing over actual costing