Budget for 2014: Direct labor costs $280,000
Direct labor- hours 20,000
Overhead costs $180,000
Actual results for 2014:
Direct labor costs $260,000
Direct labor-hours 20,000
Overhead costs $140,000
Begin by identifying the formula to calculate the actual indirect-cost rate.
Actual indirect-costs / Actual direct labor-hours = Actual indirect-cost rate Identify the formula to calculate the budgeted indirect-cost rate.
Budgeted indirect-costs / Budgeted direct labor-hours = Budgeted indirect-cost rate
Identify the formula to calculate the budgeted direct-cost rate.
Budgeted direct-costs / Budgeted direct labor-hours = Budgeted direct-cost rate
1.Compute the direct-cost rate and the indirect-cost rate per Web-designing labor-hour for 2014 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.
2. Which method would you suggest Crown Solutions use?
3. Crown Solutions' Web design for Grenville Day School was budgeted to take 100 direct labor-hours. The actual time spent on the project was 84 hours. Compute the cost of the Grenville Day School job using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct cost. take 100 direct labor-hours. The actual time spent on the project was 84 hours.
Compute the direct-cost rate and the indirect-cost rate per labor hour under:
A) Normal costing (B) Actual COST ( C) Variation Norma Cost
Direct
indirect
Requirement 2. Which method would you suggest Crown Solutions use? Explain. Choose correct answer from parenthesis . Crown Solutions should choose a job-costing system based on the ▼(direct cost , indirect cost) information available to them. If Crown Solutions knows ▼(direct costs, indirect costs )as the jobs are being done, I would recommend Crown Solutions use ▼(actual costing over normal costing, normal costing) over actual, costing by calculating a ▼(budgeted direct cost rate, budgeted indirect cost rate )to cost jobs. (Actual costing, Normal costing) enables Crown Solutions to use the ▼ (1. budgeted direct cost rate calculated at the beginning of the year 2.budgeted direct cost rate calculated at the end of the year 3.budgeted indirect cost rate calculated at the beginning of the year 4.budgeted indirect cost rate calculated at the end of the year )to estimate the cost of a job as soon as the job is completed. if Crown Solutions does not know ▼(direct costs, indirect costs ) as the jobs are being completed, I would recommend that Crown Solutions use the ▼( 1.variation of actual costing that calculates a budgeted direct cost rate. 2.variation of actual costing that calculates a budgeted indirect cost rate. 3.variation of normal costing that calculates a budgeted direct cost rate. ) 4.variation of normal costing that calculates a budgeted indirect cost rate.) This would allow Crown solutions to estimate costs on a more-timely basis. Requirement 3. Crown Solutions' Web design for Greenville Day School was budgeted to take 100 direct labor-hours. The actual time spent on the project was 84 hours. Compute the cost of the Greenville Day School job using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct cost.
Begin by identifying the formulas to calculate the direct and indirect-costs under actual costing.
Identify the formulas to calculate the direct and indirect-costs under normal costing.
Actual costing:
Direct-costs = *
Indirect-costs= *
= Identify the formulas to calculate the direct and indirect-costs under normal costing.
Normal costing :
Direct-costs = x
Indirect-costs = x
Identify the formulas to calculate the direct and indirect-costs under the variation of normal costing.
Direct-costs = x
Indirect-costs = x
What would the cost of this job be under each of the costing methods in requirement 1? (a)
(A) Actual costing (B) Normal costing (C) Variation Normalcosting
Direct cost
Indirect cost
Total Job cost