Reference no: EM132746598

Arctic Construction assembles residential houses. It 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 is the allocation base for assembly support costs. In December 2006, Arctic budgets years 2007 assembly support costs to be P8,000,000 and year 2007 direct labor-hours to be 160,000.

At the end of 2007, Arctic is comparing ,the costs of several jobs that were started and completed in 2007.

                                        L Model                                      M Model

Construction period         Feb - June 2007            May - Oct 2007

Direct materials                        106,000 ?               127,604 ?
Direct labor                       36,276 ?                          41,410 ?
Direct labor-hours               900                                     1,010

Direct materials and direct labor are paid for on a contract basis. The costs of each are known when direct materials are used or direct labor-hours are worked. The 2007 actual assembly support costs were P6,888,000, and the actual direct labor-hours were 164,000.

Problem 1: What is the budgeted indirect-cost rate?

Problem 2: What is the actual indirect-cost rate?

Problem 3: What is the job cost of the L Model using normal costing?

Problem 4: What is the job cost of the M Model using actual costing?