Anderson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Direct labor-hours is the allocation base for assembly support costs. In December 2006, Anderson budgets 2007 assembly-support costs to be $8,000,000 and 2007 direct labor-hours to be 160,000.
At the end of 2007, Anderson is comparing the costs of several jobs that were started and completed in 2007.

Direct materials and direct labor are paid for on a contract basis. The costs of each are known when direct materials are used or when direct labor-hours are worked. The 2007 actual assembly-support costs were $6,888,000, and the actual direct labor-hours were 164,000.
Required
Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ?

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Laguna Model Mission Model Construction period Direct materials Direct labor Direct labor-hours Feb-June 2007 $106,450 36,276 May-0ct 2007 $127,604 41,410 900 1,010