The total cost for each house are: $178,140, $247,120, $398,880.
1. The allocation bases rates:
Employee fringe benefits Indirect materials
Estimated overhead cost $48,600 $29,540
Total overhead driver $324,000 $422,000
($60,000+$93,000+$171,000) ($102,000+$131,000+$189,000)
Overhead allocation rate 15% 7%
($48,600/$324,000) ($29,540/$422,00)
2. The total cost of each house:
Home 1 Home 2 Home 3 Total
Direct labor $60,000 $ 93,000 $171,000 $324,000
Direct materials $102,000 $131,000 $189,000 $422,000
Fringe benefit cost allocated $9,000 $13,950 $25,650 $48,600
($60,000 x 0.15) ($93,000 x 0.15) ($171,000 x 0.15)
Indirect materials cost allocated $7,140 $9,170 $13,230 $29,540
($102,000 x 0.07) ($131,000 x 0.07) ($189,000 x 0.07)
Total cost $178,140 $247,120 $398,880 $824,140
Therefore the total cost for each house are: $178,140, $247,120, $398,880.
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The complete question is:
finch construction company expects to build three new homes during a specific accounting period. the estimated direct materials and labor costs are as follows. expected costs home 1 home 2 home 3 direct labor $ 60,000 $ 93,000 $ 171,000 direct materials 102,000 131,000 189,000 assume finch needs to allocate two major overhead costs ($48,600 of employee fringe benefits and $29,540 of indirect materials 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 3 decimal places.)
