Finch Construction Company expects to build three new homes during a specific ac

Question

Finch Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows: Home 1 Expected Costs Direct Labor Direct materials94,000 $78,000 $ 96,000 $181,000 144,000 195,000 Assume Finch needs to allocate two major overhead costs ($53,250 of employee fringe benefits and $38.970 of indirect materinls costs) among the three jobs Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. (Round Allocation rate" to 2 decimal places.)

Explanation / Answer

Expected cost Home 1 Home 2 Home3 Total Working Direct Material 78000 96000 181000 355000 Ratio=78:96:181 Direct Labour 94000 144000 195000 433000 Ratio= 94:144:195 Allocations Employee Fringe Benefits 11560.05 177581.99 23980.95 53250 Allocation in Direct labour ratio Indirect Material 8562.42 10538.37 19869.21 38970 Allocation in Direct Material ratio

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