Job Order Cost Sheet

Carlin Furniture Company refinishes and reupholsters furniture. Carlin 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 July 6, 2014, an estimate of $3,430 for reupholstering a sofa and loveseat was given to Justin Flannigan. The estimate was based on the following data:

Estimated direct materials:
40 meters at $35 per meter	$ 1,400
Estimated direct labor:
20 hours at $30 per hour	600
Estimated factory overhead (75% of direct labor cost)	450
Total estimated costs	$2,450
Markup (40% of production costs)	980
Total estimate	$3,430

On July 10, the sofa and loveseat were picked up from the residence of Justin Flannigan, 310 Suzuki Drive, Lubbock, TX, with a commitment to return it on September 7. The job was completed on September 3.

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

Materials Requisition No.	Description	Amount
310	20 meters at $35	$700
312	24 meters at $35	840

Time Ticket No.	Description	Amount
H50	10 hours at $30	$300
H55	14 hours at $30	420

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		Justin Flannigan			Date	July 6, 2014
Address		310 Suzuki Drive			Date wanted	Sept. 7, 2014
		Lubbock, TX			Date completed	Sept. 3, 2014
Item		Reupholster Sofa and Loveseat			Job. No.
ESTIMATE

Direct Materials

Direct Labor

Summary

Amount

Amount

Amount

40 Meters at $35

20 Hours at $30

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 Meters at $35

H50

10 Hours at $30

Direct Materials

Direct Labor

312

24 Meters at $35

H55

14 Hours at $30

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 three meters of materials 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 because materials were spoiled and the direct labor cost exceeded the estimate because additional hours of labor were used by an inexperienced employee.
2. Management didn't provide enough direction to complete tasks on budget.
3. The direct materials cost exceeded the estimate because materials were spoiled.
4. The direct labor cost exceeded the estimate because additional hours of labor were used by an inexperienced employee.

Select the correct answer from the above choices.