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Allocating Indirect Corts My House / Your House Assume a bulder building three houses simultaneously The direct materials and direct labor costs for each house are shown below House 1 House 2 House 3 Direct Materials $140,000 $70,000 $90,000 Direct Labor 210.000 130,000 60.000 Overhead 7 ? 7 The building contractor's total indirect conts (such as supervisor salaries and indirect materials are 584,000 Required 1. Assume the builder allocates overhead indirect costs any among the three houdel. Determine the amount of overhead cost a located to each house Comment on whether this allocation scheme is reasonable Explain why it may be inappropriate to use number of units as the location base 2. Assume instead that the builder allocates overhead costs based on total direct costs Determine the amount of overad covt allocated to each house. Compare the locations determined in requirements with the locations determined in requirement b. Identity who will benefit and who will atter if the builder uses the requirement ballocation method instead of allocating overhead coal 1. Assume that the $84,000 ot total overhead cont commits of $2.000 or indirect matchals and $21.000 od trinn benefits. Decide what you believe is the tradit rational millocation scheme and use that scheme toate the overhead cost to the three houses