Question
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
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.
Estimated direct materials (200 meters at $35 per meter) | $7,000 |
Estimated direct labor (16 hours at $20 per hour) | $320 |
Estimated factory overhead (75% of direct labor cost) | $240 |
Total estimated costs | $ 7,560 |
Markup (25% of production costs) | $ 1,890 |
Total estimate | $ 8,450 |
On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation were completed on October 10. The related materials requisition and the time tickets are summarized as follows:
Materials Requisition No. | Description | Amount |
112 | 140 meters at $35 | $4,900 |
114 | 68 meters at $35 | $2,380 |
Time Ticket No. | Description | Amount |
H10 | 10 hours at $20 | $200 |
H11 | 10 hours at $20 | $200 |
1) Complete the portion of the job cost sheet that would be prepared when the estimate is given to the customer.
2) Record the costs incurred, and prepare a job cost sheet.
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