Why might amesbury construction prefer normal costing

Reference no: EM133571894

Question 1: Job costing, process costing. In each of the following situations, determine wather job costing or process costing would be more appropriate

a. A CM firm
b. An oil refinery
c. A custom furniture manufacturer
d. A tire manufacturer
e. A textbook publisher
f. A pharmaceutical company
g. An advertising agency
h. An apparel manufacturing plant
i. A flour mill
j. A paint manufacturer
k. A medical care facility
l. A landscaping company
m. A cola-drink-concentrate producer
n. A movie studio
o. A law firm
p. A commercial aircraft manufacturer
q. A management consulting firm
r. A breakfast-cereal company
s. A catering service
t. A paper mill
u. An auto repair shop

Question 2: Actual costing, normal costing, accounting for manufacturing overhead.

Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. Destin provides the following information:

                                                  Budget for 2011   Actual Results for 2011
Direct material costs                          $2,000,000              $1,900,000
Direct manufacturing labor costs             1,500,000               1,450,000
Manufacturing overhead costs                2,700,000               2,755,000

1. Compute the actual and budgeted manufacturing overhead rates for 2011.
2. During March, the job-cost record for Job 626 contained the following information:

Direct materials used $40,000
Direct manufacturing labor costs $30,000

Compute the cost of Job 626 using (a) actual costing and (b) normal costing.

3. At the end of 2011, compute the under- or overallocated manufacturing overhead tinder normal costing. Why is there no under- or overallocated overhead under actual costing?

Question 3: Job costing, normal and actual costing.

Amesbury 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 2010, Amesbury budgets 2011 assembly-support costs to be N,300,000 and 2011 direct labor-hours to be 166,000.

Atthe end of 2011, Amesbury is comparing the costs of several jobs thatwere started and completed in 2011.

                              Laguna Model    Mission Model
Construction period              Feb-June 2011            May-Oct 2011
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 2011 actual assembly-support costs were $6,520,000, and the actual direct labor-hours were 163,000.

1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ?

2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing?

3. Why might Amesbury Construction prefer normal costing over actual costing?

Reference no: EM133571894

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