1.
Job Order Cost Sheet
Remnant Carpet Company sells and installs commercialcarpeting for office buildings. Remnant Carpet Company uses a joborder cost system. When a prospective customer asks for a pricequote on a job, the estimated cost data are inserted on anunnumbered job cost sheet. If the offer is accepted, a number isassigned to the job, and the costs incurred are recorded in theusual manner on the job cost sheet. After the job is completed,reasons for the variances between the estimated and actual costsare noted on the sheet. The data are then available to managementin evaluating the efficiency of operations and in preparing quoteson future jobs. On October 1, Remnant Carpet Company gave JacksonConsulting an estimate of $2,856 to carpet the consulting firmâsnewly leased office. The estimate was based on the followingdata:
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 $2,856
On October 3, Jackson Consulting signed a purchasecontract, and the delivery and installation were completed onOctober 10.
The related materials requisitions and time tickets aresummarized as follows:
Materials Requisition No. Description Amount 112 20 meters at $30 $600 114 24 meters at $30 720
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 costsheet that would be prepared when the estimate is given to thecustomer.
2. Record the costs incurred, and complete thejob 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 $30 $ 24 Hours at $20 $ Direct Materials $ Direct Labor Factory Overhead Total $ Total $ Total cost $ ACTUAL Direct Materials Direct Labor Summary Mat. Req. No. Description Amount Time Ticket No. Description Amount Item Amount 112 20 Meters at $30 $ H10 12 Hours at $20 $ Direct Materials $ Direct Labor 114 24 Meters at $30 H11 16 Hours at $20 Factory Overhead Total $ Total $ Total Cost $
What is the best explanation for the variances betweenactual costs and estimated costs. (For this purpose, assume thatthe additional meters of material used in the job were spoiled, thefactory overhead rate has proven to be satisfactory, and aninexperienced employee performed the work.)
a. The direct materials cost exceeded the estimate by $120because 4 meters of materials were spoiled. The direct labor costexceeded the estimate by $80 because an additional 4 hours of laborwere used by an inexperienced employee. The factory overhead costexceeded the estimate because an additional $60 of factory overheadwas allocated because of the increase in direct labor.
b. Management didn't provide enough direction to complete taskson budget.
c. The direct materials cost exceeded the estimate by $75because 3 meters of materials were spoiled.
d. The direct labor cost exceeded the estimate by $120 becausean additional 4 hours of labor were used by an inexperiencedemployee.
2.
Materials issued for the current month are as follows:
Requisition No. Material Job No. Amount 201 Aluminum 500 $85,160 202 Plastic 503 26,540 203 Rubber 504 3,960 204 Glue Indirect 2,180 205 Steel 510 37,960
Journalize the entry on Dec. 31 to record the issuance ofmaterials. Refer to the Chart of Accounts for exact wording ofaccount titles.
CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 132 Work in Process 133 Factory Overhead 134 Finished Goods 141 Supplies 142 Prepaid Insurance 143 Prepaid Expenses 181 Land 191 Factory 192 AccumulatedDepreciation-Factory
LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 241 Lease Payable 251 Wages Payable 252 Consultant Fees Payable
EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary
REVENUE 410 Sales 610 Interest Revenue
EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Office Supplies Expense 540 Administrative Expenses 560 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense
JOURNAL
DATE DESCRIPTION POST.REF. DEBIT CREDIT 1
2
3
3.
A summary of the time tickets for the current month follows:
Job No. Amount 100 $3,940 101 4,480 104 22,080 108 15,570 Indirect 6,130 111 7,120 115 7,960 117 30,690
Required: Journalize the entry on Dec. 31to record the factory labor costs. Refer to the Chart of Accountsfor exact wording of account titles.
CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 132 Work in Process 133 Factory Overhead 134 Finished Goods 141 Supplies 142 Prepaid Insurance 143 Prepaid Expenses 181 Land 191 Factory 192 AccumulatedDepreciation-Factory
LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 241 Lease Payable 251 Wages Payable 252 Consultant Fees Payable
EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary
REVENUE 410 Sales 610 Interest Revenue
EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Office Supplies Expense 540 Administrative Expenses 569 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense
Journalize the entry on Dec. 31 to record the factory laborcosts. Refer to the Chart of Accounts for exact wording of accounttitles.
PAGE 10
JOURNAL
DATE DESCRIPTION POST.REF. DEBIT CREDIT 1
2
3
1.
Job Order Cost Sheet
Remnant Carpet Company sells and installs commercialcarpeting for office buildings. Remnant Carpet Company uses a joborder cost system. When a prospective customer asks for a pricequote on a job, the estimated cost data are inserted on anunnumbered job cost sheet. If the offer is accepted, a number isassigned to the job, and the costs incurred are recorded in theusual manner on the job cost sheet. After the job is completed,reasons for the variances between the estimated and actual costsare noted on the sheet. The data are then available to managementin evaluating the efficiency of operations and in preparing quoteson future jobs. On October 1, Remnant Carpet Company gave JacksonConsulting an estimate of $2,856 to carpet the consulting firmâsnewly leased office. The estimate was based on the followingdata:
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 | $2,856 |
On October 3, Jackson Consulting signed a purchasecontract, and the delivery and installation were completed onOctober 10.
The related materials requisitions and time tickets aresummarized as follows:
Materials Requisition No. | Description | Amount | |
112 | 20 meters at $30 | $600 | |
114 | 24 meters at $30 | 720 |
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 costsheet that would be prepared when the estimate is given to thecustomer.
2. Record the costs incurred, and complete thejob order cost sheet.
JOB ORDER COST SHEET | |||||||||||||||||||||||||||||||||||||||||||||||
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Direct Materials | Direct Labor | Summary | |||||||||||||||||||||||||||||||||||||||||||||
Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||||||||||
40 Meters at $30 | $ | 24 Hours at $20 | $ | Direct Materials | $ | ||||||||||||||||||||||||||||||||||||||||||
Direct Labor | |||||||||||||||||||||||||||||||||||||||||||||||
Factory Overhead | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | Total | $ | Total cost | $ | ||||||||||||||||||||||||||||||||||||||||||
ACTUAL | |||||||||||||||||||||||||||||||||||||||||||||||
Direct Materials | Direct Labor | Summary | |||||||||||||||||||||||||||||||||||||||||||||
Mat. Req. No. | Description | Amount | Time Ticket No. | Description | Amount | Item | Amount | ||||||||||||||||||||||||||||||||||||||||
112 | 20 Meters at $30 | $ | H10 | 12 Hours at $20 | $ | Direct Materials | $ | ||||||||||||||||||||||||||||||||||||||||
Direct Labor | |||||||||||||||||||||||||||||||||||||||||||||||
114 | 24 Meters at $30 | H11 | 16 Hours at $20 | Factory Overhead | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | Total | $ | Total Cost | $ |
What is the best explanation for the variances betweenactual costs and estimated costs. (For this purpose, assume thatthe additional meters of material used in the job were spoiled, thefactory overhead rate has proven to be satisfactory, and aninexperienced employee performed the work.)
a. The direct materials cost exceeded the estimate by $120because 4 meters of materials were spoiled. The direct labor costexceeded the estimate by $80 because an additional 4 hours of laborwere used by an inexperienced employee. The factory overhead costexceeded the estimate because an additional $60 of factory overheadwas allocated because of the increase in direct labor.
b. Management didn't provide enough direction to complete taskson budget.
c. The direct materials cost exceeded the estimate by $75because 3 meters of materials were spoiled.
d. The direct labor cost exceeded the estimate by $120 becausean additional 4 hours of labor were used by an inexperiencedemployee.
2.
Materials issued for the current month are as follows:
Requisition No. | Material | Job No. | Amount |
---|---|---|---|
201 | Aluminum | 500 | $85,160 |
202 | Plastic | 503 | 26,540 |
203 | Rubber | 504 | 3,960 |
204 | Glue | Indirect | 2,180 |
205 | Steel | 510 | 37,960 |
Journalize the entry on Dec. 31 to record the issuance ofmaterials. Refer to the Chart of Accounts for exact wording ofaccount titles.
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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JOURNAL
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3.
A summary of the time tickets for the current month follows:
Job No. | Amount |
---|---|
100 | $3,940 |
101 | 4,480 |
104 | 22,080 |
108 | 15,570 |
Indirect | 6,130 |
111 | 7,120 |
115 | 7,960 |
117 | 30,690 |
Required: | |
Journalize the entry on Dec. 31to record the factory labor costs. Refer to the Chart of Accountsfor exact wording of account titles. |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|
Journalize the entry on Dec. 31 to record the factory laborcosts. Refer to the Chart of Accounts for exact wording of accounttitles.
PAGE 10
JOURNAL
DATE | DESCRIPTION | POST.REF. | DEBIT | CREDIT | |
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