You are the management accountant for X Company. Your company does

custom carpentry work and uses a job order cost system. X sends detailed job cost

sheets to its customers, along with an invoice. The job cost sheets show the date

materials were used, the dollar cost of materials, and the hours and cost of labor. A

predetermined overhead application rate is used, and the total overhead applied is

also listed.

Kalidah Saeed is a customer who recently had custom cabinets installed. Along with

her check in payment for the work done, she included a letter. She thanked the

company for including the detailed cost information but questioned why overhead

was estimated. She stated that she would be interested in knowing exactly what costs

were included in overhead, and she thought that other customers would, too.

Instructions

Prepare a letter to Ms$.$ Saeed and tell her why you did not send her information on

exact costs of overhead included in her job. Respond to her suggestion that you

provide this information.