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Requirement 3 . Chico's 201 4 audit of Pierre & Co. was budgeted to take 160 hours of professional labor time . The actual professional

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Requirement 3 . Chico's 201 4 audit of Pierre & Co. was budgeted to take 160 hours of professional labor time . The actual professional labor time spent on the audit was 180 hours . Compute the cost of the Pierre* & Co. audit using ( a ) actual costing , ( 6 ) normal costing , and ( C ) the variation from normal costing that uses budgeted rates for direct costs . Explain any differences in the job cost . Begin by identifying the formulas to calculate the direct and indirect-costs under actual costing ." ( a ) Actual Costing Direct - costs Actual direct - cost rate* X Actual qty of direct -cost inputs Indirect - costs Actual indirect - cost rate* Actual qty of cost-allocation bases Identify the formulas to calculate the direct and indirect-costs under normal costing . ( 6) Normal Costing* Direct - costs Actual direct - cost rate* Actual qty of direct -cost inputs Indirect - costs Budgeted indirect -cost rate* Actual qty of cost- allocation bases Identify the formulas to calculate the direct and indirect-costs under the variation of normal costing . ( C ) Variation of Normal Costing : Direct - costs Budgeted direct - cost rate* X Actual qty of direct - cost inputs* Indirect -costs Budgeted indirect -cost rate* X Actual qty of cost- allocation bases Compute the cost of the Pierre & Co . audit under each of the three methods . ( 2) ( b ) ( C ) Actual Normal Variation of Cost of Pierre audit :" Costing Costing Normal Costing Direct - costs $ 9. 540 $ 9. 540 5 10. 800 Indirect - costs 8. 640 8. 100 8. 100 Total job costs 18, 180 17, 640 18. 900 All three costing systems use the actual professional labor time of 180 hours . The budgeted 160 hours is not used in job costing* The actual costing figure of $ 18180 exceeds the normal costing figure of

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