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 $2,340 to carpet the consulting firms newly leased office. The estimate was based on the following data:

Estimated direct materials:
30 sq. ft. at $32 per sq. ft.	$ 960
Estimated direct labor:
24 hours at $20 per hour	480
Estimated factory overhead (75% of direct labor cost)	360
Total estimated costs	$1,800
Markup (30% of production costs)	540
Total estimate	$2,340

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 $32	$480
114	19 sq. ft. at $32	608

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.

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.

JOB ORDER COST SHEET Customer Jackson Consulting Date October 1 October 10 October 10 Date wanted Date completed Job. No. Clothing, Kids Clothes, Toddler Clothes Carter's ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount 30 sq. ft. at $32 24 Hours at $20 Direct Materials Direct Labor Factory Overhead Total $ $ Total Total cost ACTUAL Direct Labor Description Direct Materials Description Summary Mat. Reg. No. Amount Time Ticket No. Amount Item Amount Direct Materials 310 15 sq. ft. at $32 H10 12 Hours at $20 Direct Labor 312 19 sq. ft. at $32 H11 16 Hours at $20 Factory Overhead Total Total Total Cost