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 fobs. On October 1, Remnant Carpet Company gave Jackson Consulting an estimate of $2,301 to carpet the consulting firm's newly leased office. The estimate was based on the following data: $ 930 Estimated direct materials: 30 sq. ft. at $31 per sq. ft. Estimated direct labor: 16 hours at $30 per hour Estimated factory overhead (75% of direct labor cost) 480 360 Total estimated costs $1,770 Markup (30% of production costs) 531 Total estimate $2,301 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 15 sq. ft. at $31 $465 114 19 sq. ft, at $31 589 Time Ticket No. Description Amount H10 8 hours at $30 $240 H11 12 hours at $30 360 Venha CSL 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 ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount Direct Materials 10.1 it at $31 16 Hours at $30 Direct Labor Factory Overhead Total Total cost Total Direct Materials Direct Labor Summary Mat. Reg. No. Description Amount Time Ticket No. Description Amount Item Amount 3110 15 sq. ft. at $31 Direct Materials HIO 8 Hours at $30 Direct Labor 212 19 sq. ft. at $31 H11 12 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 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.) a. The direct materials cost exceeded the estimate by $124 because 4 square feet of materials were spoiled. The direct labor cost exceeded the estimate by $120 because an additional 4 hours of labor were used by an inexperienced employee. The factory overhead cost exceeded the estimate because an additional $90 of factory overhead was allocated because of the increase in direct labor. b. Management didn't provide enough direction to complete tasks on budget. c. The direct materials cost exceeded the estimate by $93 because 3 square feet of materials were spoiled. d. The direct labor cost exceeded the estimate by $360 because an additional 4 hours of labor were used by an inexperienced employee. Select the correct answer from the above choices