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Zachary Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected
Zachary Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Direct labor Direct materials Home 1 $ 65,000 108,000 Home 2 $ 91,000 136,000 Home 3 $172,000 187,000 Assume Zachary needs to allocate two major overhead costs ($32,800 of employee fringe benefits and $12,930 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. (Round "Allocation rate" to 2 decimal places.) rate to cimal places.) Fringe Benefits: Home Allocation Rate Allocated Cost 1 $ 0 x Weight of Base X $ 65,000= x $ 91,000/= X $ 172,000= 2 0 3 0 Total $ 0 Indirect Materials: Home Allocation Rate 1 x Weight of Base = Allocated Cost X $ 108,000/= $ 0 X $ 136,000 = 0 $ 187,000/= 0 2 3 Total $ 0 Home 3 Total $ The cost components to determine the total cost of each house: Expected Costs Home 1 Home 2 Direct labor $ 65,000 $ 91,000 Direct materials 136,000 Fringe benefits Indirect materials Total cost $ 65,000 $ 227,000 156,000 136,000 0 0 $ 0 $ 292,000
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