job costing actual normal and variation from normal costing 269004

Job costing; actual, normal, and variation from normal costing. Braden Brothers, Inc., is an architecture firm specializing in high rise buildings. Its job costing system has a single direct cost category (architectural labor) and a single indirect cost pool, which contains all costs of supporting the office. Support costs are allocated to individual jobs using architect labor hours. Braden Brothers employs 15 architects.



Budgeted and actual amounts for 2010 are as follows:

Required

1. Compute the direct cost rate and the indirect cost rate per architectural labor hour for 2010 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.

2. Braden Brother’s architectural sketches for Champ Tower in Houston was budgeted to take 275 hours of architectural labor time. The actual architectural labor time spent on the job was 250 hours. Compute the cost of the Champ Tower sketches using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for directcosts.