Question

Job 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 $1,098 to carpet the consulting firm's newly leased office. The estimate was based on the following data Estimated direct materials: 30 meters at $30 per meter $ 900 Estimated direct labor: 16 hours at $20 per hour 320 Estimated factory overhead (75% of direct labor cost) 240 Total estimated costs $1,460 Markup (30% of production costs) 438 Total estimate $1,898 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: Materials Requisition No. Description Amount 112 15 meters at $30 $450 114 19 meters at $30 570 Time Ticket No. Description Amount

Answer 1

Solution:

Job Order Cost Sheet

Customer	Jackson	Costing		Date		October 1
				Date Wanted		October 10
				Date Completed		October 10
				Job No.
		Estimate
Direct Materials			Direct labor			Summary
	Amount			Amount			Amount
30 meters at $30	$900		16Hours at $20	$320		Direct materials	$900
						Direct labor	$320
						Factory overhead	$240
Total			Total	$320		Total	$1,460
		Actual
	Direct Materials		Direct labor			Summary
Mat. Req. No.	Description	Amount	Time Ticket No.	Description	Amount	Item	Amount
112	15 meters at $30	$450	H10	8Hours at $20	$160	Direct Materials	$1020
114	19 meters at $30	$570	H11	12Hours at $20	$240	Direct labor	$400
Total		$1020			$400	Factory overhead) 75% of direct labor)	$300
						Total	$1,720

2.)

Option 'A' is a correct option.

The direct materials cost exceed the estimate by $120 because 4meters of materials were spoiled. The direct labor costs exceed the estimate job by $80 because an additional 4 hours of labor were used by an inexperienced employees. The factory overhead costs exceeded the estimate because an additional $60 of factory overhead allocated because of the increase in direct labor.