Read the requirements Requirement 1. Compute the (a) budgeted indirect-cost rate

Question

Read the requirements Requirement 1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ? dentify the formula to calculate the budgeted indirect cost rate and then caloulate the rate Budgeted indirect costs Budgeted direct labor hours 220,000 Budgeted indirect cost rate 8,800,000 40 per DLH dentify the formula to calculate the actual indirect cost rate and then caloulate the rate. Actual indirect costs Actual direct labor hours Actual indirect cost rate 8,400,000 200,000 42 per DLH These rates differ because both the cost and hour amounts in the two calculations are different Requirement 2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing? (a) identify the formula to calculate the indirect costs under normal costing and then calculate the indirect costs for each model. (Normal costing) Budgeted idrect cost rate x A tual direct labor hours. Laguna Mission Indirect costs 970 40,740 42 per DLH x 1000 42,000 Enter any number in the edit fields and then click Check Answer remaining

Explanation / Answer

Req 1 Indirect cost rate-Budgeted Budgeted Indirect cost     / Budgetd Labour hours    = Budgeted Indirect cost rate 8800,000   / 220,000      = $40 per DLH Indirect cost rate-Actual Actual Indirect cost      / Actual labour hours      = Actual Indirect cost rate 8400000       / 200,000        = $42 per DLH Req 2: Normal costing Budgeted rate   * Actual DLH     = Indirect cost Laguna 40 970 38,800 Mission 40 1000 40,000 Actual Costing Actual Cost rate * Actual DLH     = Indirect cost Laguna 42 970 40,740 Mission 42 1000 42,000

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