PR 16-3A - 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 $9,450 to carpet the consulting firm's newly leased office. The estimate was based on the following data:

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation were completed on October 10.

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

2 Materials Requisition No.

3 Description

4 Amount

5 112

6 140 meters at $35

7 $4,900

8 114

9 68 meters at $35

10 2,380

11

12 Time Ticket No.

13 Description

14 Amount

15 H10

16 10 hours at $20

17 $200

18 H11

19 10 hours at $20

20 200

21

Instructions

22 Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

23 Record the costs incurred, and prepare a job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that the additional meters of material used in the job were spoiled, the factory overhead rate has proven to be satisfactory, and an inexperienced employee performed the work.

Estimated direct materials: $7,000 Estimated direct labor: 320 240 $7,560 1,890 $9,450 Estimated factory overhead (75% of direct labor cost) . . . . . . . . . . . . . . . Markup (25% of production costs)