Gibson Construction Company expects to build three new homesduring a specific accounting period. The...

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Accounting

Gibson Construction Company expects to build three new homesduring a specific accounting period. The estimated direct materialsand labor costs are as follows: Expected Costs Home 1 Home 2 Home 3Direct labor $ 80,000 $ 94,000 $ 187,000 Direct materials 92,000139,000 195,000 Assume Gibson needs to allocate two major overheadcosts ($54,150 of employee fringe benefits and $12,780 of indirectmaterials costs) among the three jobs. Required Choose anappropriate cost driver for each of the overhead costs anddetermine the total cost of each house. (Round "Allocation rate" to2 decimal places.)

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4.2 Ratings (821 Votes)

Total direct labor	361000	=80000+94000+187000
Total direct materials	426000	=92000+139000+195000

Allocation rate for fringe benefits	0.15	=54150/361000
Allocation rate for indirect materials	0.03	=12780/426000

Fringe benefits:
House	Allocation rate	X	Weight of Base	=	Allocated cost
1	0.15	X	80000	=	12000
2	0.15	X	94000	=	14100
3	0.15	X	187000	=	28050
Total					54150

Indirect materials:
House	Allocation rate	X	Weight of Base	=	Allocated cost
1	0.03	X	92000	=	2760
2	0.03	X	139000	=	4170
3	0.03	X	195000	=	5850
Total					12780

Expected costs	Home 1	Home 2	Home 3	Total
Direct labor	80000	94000	187000	361000
Direct materials	92000	139000	195000	426000
Fringe benefits	12000	14100	28050	54150
Indirect materials	2760	4170	5850	12780
Total cost	186760	251270	415900	853930

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In: AccountingGibson Construction Company expects to build three new homesduring a specific accounting period. The estimated...Gibson Construction Company expects to build three new homesduring a specific accounting period. The estimated direct materialsand labor costs are as follows: Expected Costs Home 1 Home 2 Home 3Direct labor $ 80,000 $ 94,000 $ 187,000 Direct materials 92,000139,000 195,000 Assume Gibson needs to allocate two major overheadcosts ($54,150 of employee fringe benefits and $12,780 of indirectmaterials costs) among the three jobs. Required Choose anappropriate cost driver for each of the overhead costs anddetermine the total cost of each house. (Round "Allocation rate" to2 decimal places.)