Hallmark Furniture Company refinishes and reupholsters furniture. Hallmark Furniture 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 Febuary 14, 20Y1, an estimate of $897.60 for reupholstering a chair and couch was given to Millard Schmidt. The estimate was based on the following data:

Estimated direct materials $108.00

12 meters at $9 per meter

Estimated direct labor:

32 hours at $16 per hour 512.00

Estimated factory overhead (25% of direct labor cost) 128.00

Total estimated costs $748.00

Markup (20% of production costs) 149.60

Total estimate $897.60

On February 17, the chair and couch were picked up from the residence of Millard Schmidt, 315 White Oak Drive, Columbus, Georgia, with a commitment to return them on March 15. The job was completed on March 9.

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

Materials Requisition No. Description Amount

122 9 meters at $9 $81

129 7 meters at $9 63

Time Ticket No. Description Amount

T344 20 hours at $14 $280

T348 18 hours at $14 252

Instructions

1. Prepare a job order cost sheet showing the estimate given to the customer. Use the format shown on the next page.

2. Assign number 02-019 to the job, record the costs incurred, and complete the job order cost sheet Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that four meters of materials were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.

Problem 10-3 Name: Section: Score: 0% Key Code: 2 Instructions Answers are entered in the cells with gray backgrounds. Cells with non-gray backgrounds are protected and cannot be edited. A red asterisk (*) will appear in the row immediately to the right of an incorrect answer. 1. and 2. JOB ORDER COST SHEET Customer Address Millard Schmidt 314 White Oak Drive Columbus, GA Reupholster couch and chair Item Date Date wanted Date completed Job. No. ESTIMATE Direct Labor Direct Materials Amount meters at hours at Total ACTUAL Direct Labor Direct Materials Mat. Req. No. 122 129 Total meters at Time Ticket No. T344 hours at meters at T348 hours at Amount Total Comments: Total SHEET Date wanted Date completed Job. No. February 14, 20Y1 March 14, 20Y1 March 9, 20Y1 02-019 rect Labor Summary Amount Amount Direct materials Direct labor Factory overhead Total rect Labor Summary Amount Item Direct materials Direct labor Factory overhead Total Amount