Question

ob 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 $2,898 to carpet the consulting firm's newly leased office. The estimate was based on the following data Estimated direct materials 30 meters at $34 per meter 1,020 Estimated direct labor: 20 hours at $30 per hour 600 Estimated factory overhead (75% of direct 450 labor cost) Total estimated costs $2,070 Markup (40% of production costs) 828 $2,898 Total estimate 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 Description Amount No 15 meters at 112 $510 $34 19 meters at 114 646 $34 Time Ticket No. Description Amount H10 10 hours at $30 $300 H11 420 14 hours at $30

Answer 1

	Estimate
	Direct Materials				Direct Labor				Summary
			Amount				Amount				Amount
	30 meters at $ 34		$ 1,020.00		20 hours at $ 30		$ 600.00		Direct Materials		$ 1,020.00
									Direct Labor		$     600.00
									Factory OH		$     450.00
	Total		$ 1,020.00		Total		$ 600.00		Total cost		$ 2,070.00
Actual
Mat. Req.	Direct Materials			Time Tickt	Direct Labor				Summary
No.			Amount	No.			Amount				Amount
112	15 meters at $ 34		$     510.00	M10	10 hours at $ 30		$ 300.00		Direct Materials		$ 1,156.00
114	19 meters at $ 34		$     646.00	M11	14 hours at $ 30		$ 420.00		Direct Labor		$     720.00
									Factory OH		$     540.00
	Total		$ 1,156.00		Total		$ 720.00		Total cost		$ 2,416.00

Option (a) explains in the best way the reasons for variances