1. Job Order Cost Sheet Remnant Carpet Company sells and installs commercial car
ID: 2407070 • Letter: 1
Question
1.
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 $2,856 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:
Required:
Enter amounts as positive numbers.
1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.
2. Record the costs incurred, and complete the job order cost sheet.
What is the best explanation 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.)
a. The direct materials cost exceeded the estimate by $120 because 4 meters of materials were spoiled. The direct labor cost exceeded the estimate by $80 because an additional 4 hours of labor were used by an inexperienced employee. The factory overhead cost exceeded the estimate because an additional $60 of factory overhead was allocated because of the increase in direct labor.
b. Management didn't provide enough direction to complete tasks on budget.
c. The direct materials cost exceeded the estimate by $75 because 3 meters of materials were spoiled.
d. The direct labor cost exceeded the estimate by $120 because an additional 4 hours of labor were used by an inexperienced employee.
2.
Materials issued for the current month are as follows:
Journalize the entry on Dec. 31 to record the issuance of materials. Refer to the Chart of Accounts for exact wording of account titles.
Interest Expense
JOURNAL
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3.
A summary of the time tickets for the current month follows:
Journalize the entry on Dec. 31 to record the factory labor costs. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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Estimated direct materials: 40 meters at $30 per meter $ 1,200 Estimated direct labor: 24 hours at $20 per hour 480 Estimated factory overhead (75% of direct labor cost) 360 Total estimated costs $2,040 Markup (40% of production costs) 816 Total estimate $2,856Explanation / Answer
a. The direct materials cost exceeded the estimate by $120 because 4 meters of materials were spoiled. The direct labor cost exceeded the estimate by $80 because an additional 4 hours of labor were used by an inexperienced employee. The factory overhead cost exceeded the estimate because an additional $60 of factory overhead was allocated because of the increase in direct labor.
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JOB ORDER COST SHEET ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount 40 Meters at $30 1200 24 Hours at $20 480 Direct Materials 1200 Direct Labor 480 Factory Overhead 360 Total 1200 480 Total cost 2040 ACTUAL Direct Materials Direct Labor Summary Mat. Req. No. Description Amount Time Ticket No. Description Amount Item Amount 112 20 Meters at $30 600 H10 12 Hours at $20 240 Direct Materials 1320 114 24 Meters at $30 720 H11 16 Hours at $20 320 Direct Labor 560 Factory Overhead 420 Total 1320 Total 560 Total cost 2300Related Questions
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