Finance and Accounting Job Costing

Project description
Da Builders is a construction company that builds and assembles residential houses. The company uses a job-costing system with two direct-cost categories—direct materials and direct labor—and one indirect-cost pool—assembly support. Direct labor-hours are the allocation base for assembly support costs. In December 2011, the company budgets 2012 assembly-support costs to be $8,300,000 and 2012 direct labor-hours to be 166,000.
At the end of 2012, Da Builders is comparing the costs of several jobs that were started and completed in 2012.
Model 1
Model 2
Construction period
Feb–June 2012
May–Oct 2012
Direct material costs
$106,760
$127,550
Direct labor costs
$36,950
$41,320
Direct labor-hours
960
1,050
Direct materials and direct labor are paid for on a contract basis. The costs of each are known when direct materials are used or when direct labor-hours are worked. The 2012 actual assembly-support costs were $6,520,000 and the actual direct labor-hours were 163,000.
1. What are the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate? Why do they differ?
2. What are the job costs of the Model 1 and the Model 2 using (a) normal costing and (b) actual costing?
3. Why might Da Builders prefer normal costing over actual costing?
Submission Requirements:
Answer the problem in detail with a conclusion and results. Submit your work in a Microsoft Excel file, showing all the steps of solutions to all calculations.

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