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eBook Calculator Job Order Cost Sheet Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost

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Job Order Cost Sheet

Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On October 1, Remnant Carpet Company gave Jackson Consulting an estimate of $2,968 to carpet the consulting firms newly leased office. The estimate was based on the following data:

Estimated direct materials:
40 sq. ft. at $32 per sq. ft. $ 1,280
Estimated direct labor:
24 hours at $20 per hour 480
Estimated factory overhead (75% of direct labor cost) 360
Total estimated costs $2,120
Markup (40% of production costs) 848
Total estimate $2,968

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation was completed on October 10.

The related materials requisitions and time tickets are summarized as follows:

Materials Requisition No. Description Amount
112 20 sq. ft. at $32 $640
114 24 sq. ft. at $32 768
Time Ticket No. Description Amount
H10 12 hours at $20 $240
H11 16 hours at $20 320

Required:

Enter amounts as positive numbers.

1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

2. Record the costs incurred and complete the job order cost sheet.

JOB ORDER COST SHEET
Customer Jackson Consulting Date October 1
Date wanted October 10
Date completed October 10
Job. No.
ESTIMATE
Direct Materials Direct Labor Summary
Amount Amount Amount
40 sq. ft. at $32 $ 24 Hours at $20 $ Direct Materials $
Direct Labor
Factory Overhead
Total $ Total $ Total cost $
ACTUAL
Direct Materials Direct Labor Summary
Mat. Req. No. Description Amount Time Ticket No. Description Amount Item Amount
310 20 sq. ft. at $32 $ H10 12 Hours at $20 $ Direct Materials $
Direct Labor
312 24 sq. ft. at $32 H11 16 Hours at $20 Factory Overhead
Total $ Total $ Total Cost $

What is the best explanation for the variances between actual costs and estimated costs? (For this purpose, assume that the additional square feet of material used in the job were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.)

  1. The direct materials cost exceeded the estimate by $128 because 4 square feet of materials were spoiled. The direct labor cost exceeded the estimate by $80 because an additional 4 hours of labor were used by an inexperienced employee. The factory overhead cost exceeded the estimate because an additional $60 of factory overhead was allocated because of the increase in direct labor.
  2. Management didn't provide enough direction to complete tasks on budget.
  3. The direct materials cost exceeded the estimate by $96 because 3 square feet of materials were spoiled.
  4. The direct labor cost exceeded the estimate by $240 because an additional 4 hours of labor were used by an inexperienced employee.

Select the correct answer from the above choices.

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