Job Order Cost Sheet Carlin Furniture Company refinishes and reupholsters furnit
ID: 2424954 • 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.
Estimated direct materials: 40 meters at $35 per meter $ 1,400 Estimated direct labor: 20 hours at $30 per hour 600 Estimated factory overhead (75% of direct labor cost) 450 Total estimated costs $2,450 Markup (40% of production costs) 980 Total estimate $3,430Explanation / Answer
ESTIMATED JOB COST SHEET Customer: Justin Flannigan Address: 310 Suzuki Drive,Lubbock, TX Item: Reupholster Sofa and Loveseat PRTICULARS AMOUNT($) Direct Material 1400 Direct Labour Hr 600 Estimated Factory Overhead 450 Total Cost 2450 Mark Up (40% of cost) 980 Estimated Selling Price 3430 ACTUAL JOB COST SHEET Customer: Justin Flannigan Address: 310 Suzuki Drive,Lubbock, TX Item: Reupholster Sofa and Loveseat PRTICULARS AMOUNT($) AMOUNT($) Direct Material Material 310 (20Mtrs*$35) 700 Material 312 (24Mtrs*$35) 840 1540 Direct Labour Hr H50 (10Hrs*$30) 300 H55 (14Hrs*$30) 420 720 Estimated Factory Overhead 540 Total Cost 2800 Markup(40% on cost) 1120 Seling Price 3920 There was variance between estimeted and actual cost because of the following reason: The direct materials cost exceeded the estimate because materials were spoiled. The direct labor cost exceeded the estimate because additional hours of labor were used by an inexperienced employee
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