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 $2,704 to carpet the consulting firm’s newly leased office. The estimate was based on the following data: Estimated direct materials: 40 meters at $31 per meter $ 1,240 Estimated direct labor: 24 hours at $20 per hour 480 Estimated factory overhead (75% of direct labor cost) 360 Total estimated costs $2,080 Markup (30% of production costs) 624 Total estimate $2,704 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 20 meters at $31 $620 114 24 meters at $31 744 Time Ticket No. Description Amount H10 12 hours at $20 $240 H11 16 hours at $20 320 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. JOB ORDER COST SHEET Customer Jackson Consulting Date October 1 Date wanted October 10 Date completed October 10 Job. No. ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount 40 Meters at $31 $fill in the blank 7059e7fa7077062_1 24 Hours at $20 $fill in the blank 7059e7fa7077062_2 Direct Materials $fill in the blank 7059e7fa7077062_3 Direct Labor fill in the blank 7059e7fa7077062_4 Factory Overhead fill in the blank 7059e7fa7077062_5 Total $fill in the blank 7059e7fa7077062_6 Total $fill in the blank 7059e7fa7077062_7 Total cost $fill in the blank 7059e7fa7077062_8 ACTUAL Direct Materials Direct Labor Summary Mat. Req. No. Description Amount Time Ticket No. Description Amount Item Amount 112 20 Meters at $31 $fill in the blank 7059e7fa7077062_9 H10 12 Hours at $20 $fill in the blank 7059e7fa7077062_10 Direct Materials $fill in the blank 7059e7fa7077062_11 Direct Labor fill in the blank 7059e7fa7077062_12 114 24 Meters at $31 fill in the blank 7059e7fa7077062_13 H11 16 Hours at $20 fill in the blank 7059e7fa7077062_14 Factory Overhead fill in the blank 7059e7fa7077062_15 Total $fill in the blank 7059e7fa7077062_16 Total $fill in the blank 7059e7fa7077062_17 Total Cost $fill in the blank 7059e7fa7077062_18 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.) The direct materials cost exceeded the estimate by $124 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. Management didn't provide enough direction to complete tasks on budget. The direct materials cost exceeded the estimate by $75 because 3 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 inexperienced employee.

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 $2,704 to carpet the consulting firm’s newly leased office. The estimate was based on the following data: Estimated direct materials: 40 meters at $31 per meter $ 1,240 Estimated direct labor: 24 hours at $20 per hour 480 Estimated factory overhead (75% of direct labor cost) 360 Total estimated costs $2,080 Markup (30% of production costs) 624 Total estimate $2,704 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 20 meters at $31 $620 114 24 meters at $31 744 Time Ticket No. Description Amount H10 12 hours at $20 $240 H11 16 hours at $20 320 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. JOB ORDER COST SHEET Customer Jackson Consulting Date October 1 Date wanted October 10 Date completed October 10 Job. No. ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount 40 Meters at $31 $fill in the blank 7059e7fa7077062_1 24 Hours at $20 $fill in the blank 7059e7fa7077062_2 Direct Materials $fill in the blank 7059e7fa7077062_3 Direct Labor fill in the blank 7059e7fa7077062_4 Factory Overhead fill in the blank 7059e7fa7077062_5 Total $fill in the blank 7059e7fa7077062_6 Total $fill in the blank 7059e7fa7077062_7 Total cost $fill in the blank 7059e7fa7077062_8 ACTUAL Direct Materials Direct Labor Summary Mat. Req. No. Description Amount Time Ticket No. Description Amount Item Amount 112 20 Meters at $31 $fill in the blank 7059e7fa7077062_9 H10 12 Hours at $20 $fill in the blank 7059e7fa7077062_10 Direct Materials $fill in the blank 7059e7fa7077062_11 Direct Labor fill in the blank 7059e7fa7077062_12 114 24 Meters at $31 fill in the blank 7059e7fa7077062_13 H11 16 Hours at $20 fill in the blank 7059e7fa7077062_14 Factory Overhead fill in the blank 7059e7fa7077062_15 Total $fill in the blank 7059e7fa7077062_16 Total $fill in the blank 7059e7fa7077062_17 Total Cost $fill in the blank 7059e7fa7077062_18 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.) The direct materials cost exceeded the estimate by $124 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. Management didn't provide enough direction to complete tasks on budget. The direct materials cost exceeded the estimate by $75 because 3 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 inexperienced employee.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Job Cost Sheet

Estimated direct materials:
40 meters at $31 per meter	$ 1,240
Estimated direct labor:
24 hours at $20 per hour	480
Estimated factory overhead (75% of direct labor cost)	360
Total estimated costs	$2,080
Markup (30% of production costs)	624
Total estimate	$2,704

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	20 meters at $31	$620
114	24 meters at $31	744

Time Ticket No.	Description	Amount
H10	12 hours at $20	$240
H11	16 hours at $20	320

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.

JOB ORDER COST SHEET

Customer	Jackson Consulting	Date	October 1
		Date wanted	October 10
		Date completed	October 10
		Job. No.
ESTIMATE

Direct Materials

Direct Labor

Summary

Amount

40 Meters at $31

$fill in the blank 7059e7fa7077062_1

24 Hours at $20

$fill in the blank 7059e7fa7077062_2

Direct Materials

$fill in the blank 7059e7fa7077062_3

Direct Labor

fill in the blank 7059e7fa7077062_4

Factory Overhead

fill in the blank 7059e7fa7077062_5

Total

$fill in the blank 7059e7fa7077062_6

Total

$fill in the blank 7059e7fa7077062_7

Total cost

$fill in the blank 7059e7fa7077062_8

ACTUAL

Direct Materials

Direct Labor

Summary

Mat. Req. No.

Description

Amount

Time Ticket No.

Description

Amount

Item

Amount

112

20 Meters at $31

$fill in the blank 7059e7fa7077062_9

H10

12 Hours at $20

$fill in the blank 7059e7fa7077062_10

Direct Materials

$fill in the blank 7059e7fa7077062_11

Direct Labor

fill in the blank 7059e7fa7077062_12

114

24 Meters at $31

fill in the blank 7059e7fa7077062_13

H11

16 Hours at $20

fill in the blank 7059e7fa7077062_14

Factory Overhead

fill in the blank 7059e7fa7077062_15

Total

$fill in the blank 7059e7fa7077062_16

Total

$fill in the blank 7059e7fa7077062_17

Total Cost

$fill in the blank 7059e7fa7077062_18

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.)

The direct materials cost exceeded the estimate by $124 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.
Management didn't provide enough direction to complete tasks on budget.
The direct materials cost exceeded the estimate by $75 because 3 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 inexperienced employee.

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