Job Order Cost Sheet Carlin Furniture Company refinishes and reupholsters furnit
ID: 2424992 • Letter: J
Question
Job Order Cost Sheet
Carlin Furniture Company refinishes and reupholsters furniture. Carlin Furniture 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 July 6, 2014, an estimate of $3,430 for reupholstering a sofa and loveseat was given to Justin Flannigan. The estimate was based on the following data:
On July 10, the sofa and loveseat were picked up from the residence of Justin Flannigan, 310 Suzuki Drive, Lubbock, TX, with a commitment to return it on September 7. The job was completed on September 3.
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 three meters of materials were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.)
Select the correct answer from the above choices.
Explanation / Answer
Solution:
1) and 2)
JOB ORDER COST SHEET
Customer
Justin Flannigan
Date
July 6, 2014
Address
310 Suzuki Drive
Date wanted
Sept. 7, 2014
Lubbock, TX
Date completed
Sept. 3, 2014
Item
Reupholster Sofa and Loveseat
Job. No.
ESTIMATE
Direct Materials
Direct Labor
Summary
Amount
Amount
Amount
40 Meters at $35
1,400
20 Hours at $30
600
Direct Materials
$1,400
Direct Labor
$600
Factory Overhead
$450
Total
1,400
Total
600
Total cost
$2,450
ACTUAL
Direct Materials
Direct Labor
Summary
Mat. Req. No.
Description
Amount
Time Ticket No.
Description
Amount
Item
Amount
310
20 Meters at $35
$700
H50
10 Hours at $30
$300
Direct Materials
$1,540
Direct Labor
$720
312
24 Meters at $35
$840
H55
14 Hours at $30
$420
Factory Overhead
$540
Total
$1,540
Total
$720
Total Cost
$2,800
Actual factory overhead is 75% of direct labor cost. Therefore, 75% x $720 = $540.
The direct materials cost exceeded the estimate by $140 because 4 meters of materials were spoiled. The direct labor cost exceeded the estimate by $120 because an additional 4 hours of labor were used by an inefficient employee. Hence, the direct materials cost exceeded the estimate because materials were spoiled and the direct labor cost exceeded the estimate because additional hours of labor were used by an inexperienced employee
JOB ORDER COST SHEET
Customer
Justin Flannigan
Date
July 6, 2014
Address
310 Suzuki Drive
Date wanted
Sept. 7, 2014
Lubbock, TX
Date completed
Sept. 3, 2014
Item
Reupholster Sofa and Loveseat
Job. No.
ESTIMATE
Direct Materials
Direct Labor
Summary
Amount
Amount
Amount
40 Meters at $35
1,400
20 Hours at $30
600
Direct Materials
$1,400
Direct Labor
$600
Factory Overhead
$450
Total
1,400
Total
600
Total cost
$2,450
ACTUAL
Direct Materials
Direct Labor
Summary
Mat. Req. No.
Description
Amount
Time Ticket No.
Description
Amount
Item
Amount
310
20 Meters at $35
$700
H50
10 Hours at $30
$300
Direct Materials
$1,540
Direct Labor
$720
312
24 Meters at $35
$840
H55
14 Hours at $30
$420
Factory Overhead
$540
Total
$1,540
Total
$720
Total Cost
$2,800
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