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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Job order cost sheet

Stretch and Trim Carpet Company sells and installs commercial carpeting for office buildings. Stretch and Trim 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 officer 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 for management to use in evaluating the efficiency of operations and in preparing quotes on future jobs. On May 9, Stretch and Trim gave Lunden Consulting an estimate of $18,044 to carpet the Consulting firm’s newly leased office. The estimate was based on the following data:

Estimated direct materials:  
400 sq. ft at $32 per sq. ft.................................. $12,800
Estimated direct labor:  
30 hours at $20 per hour................................... 600
Estimated factory overhead (80% of direct labor cost)........... 480
Total estimated costs......................................... $13,880
Markup (30% of production costs)............................. 4,164
Total estimate................................................ $18,044

On May 10, Lunden Consulting signed a purchase contract, and the carpet was delivered and installed on May 15.

The related materials requisitions and time tickets are .summarized as follows:

Materials Requisition No. Description Amount
132 360 sq. ft. at $32 $11,520
134 50 sq. ft. at $32 1,600
Time Ticket No. Description Amount
H9 18 hours at $19 $342
H12 18 hours at $19 342

Instructions

1. Complete that portion of the job order cost sheet that would he prepared when the estimate is given to the customer. Round factory' overhead applied to the nearest dollar.

2. Record the costs incurred and prepare a job order cost sheet. Comment on the reasons for the variances between actual cost and estimated costs. For this purpose, assume that the additional square feet of material used in the job were spoiled, the factory overhead rate has proven to be satisfactory, and an inexperienced employee performed the work.

(1)

To determine

Job cost sheet:

Job cost sheet is a document which is used to record manufacturing costs. It is prepared by the company which makes use of job costing system for computation and allocation of cost to products. It is a subsidiary ledger to work in process account as it contains all information about jobs.

To prepare: an estimate to be given in job cost sheet by Company S&TC.

Explanation

Prepare job order cost sheet for estimate as follows:

(2)

To determine

To prepare: job order cost sheet by Company S &TC for actual cost incurred.

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