Question: Ohio river company uses a pre determined rate for applying overhead to production using normal costing. The rates for Year 1 follow: variable, 200 percent of direct labor dollars; fixed, 300 percent of direct labor dollars. Actual overhead costs incurred follow: variable, $20,000; fixed, $26,000. Actual direct materials costs were $5,000, and actual direct labor costs were $9,000. Ohio River produced one job in Year 1.
a. Calculate actual costs of the job.
b. Calculate normal costs of the job using predetermined overhead rates.