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 tob, 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 $3,133 to carpet the consulting firm's newly leased office. The estimate was based on the following data: Estimated direct materials: 40 sq. ft. at $34 per sq. ft. $1,360 Estimated direct labor: 20 hours at $30 per hour 600 Estimated factory overhead (75 % of direct labor cost) 450 $2,410 Total estimated costs Markup (30 % of production costs) 723 $3,133 Total estimate 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: Amount Description Materials Requisition No. $680 20 sq. ft. at $34 112 24 sq. ft. at $34 816 114 Amount Time Ticket No. Description $300 H10 10 hours at $30 420 14 hours at $30 H11 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 October 1 Jackson Consulting Date Customer October 10 Date wanted October 10 Date completed Job. No. ESTIMATE Summary Direct Labor Direct Materials Amount Amount Amount Direct Materials 20 Hours at $30 40 sq. ft. at $34 Direct Labor Factory Overhead Total Total cost Total ACTUAL Summary Direct Labor Direct Materials Previous Direct Labor Factory Overhead Total Total Total cost ACTUAL Summary Direct Materials Direct Labor Amount Amount Item Amount Mat. Req. No. Description Time Ticket No. Description Direct Materials 20 sq. ft. at $34 H10 10 Hours at $30 310 Direct Labor Factory Overhead 24 sq. ft. at $34 312 14 Hours at $30 H11 Total Total Cost Total 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 $136 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 $102 because 3 square feet of materials were spolled. 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
