Question

Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was started and completed during the current period, shows charges of $5,000 for direct materials, $8,000 for direct labor, and $6,000 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $2,500 for direct materials and $4,000 for direct labor. Required: 1a. Should any overhead cost be applied to Job W at year-end? Yes No 1b. How much overhead cost should be applied to Job W?

Answer 1

1) Yes

2) Overhead Job W= $3,000

Step-by-step explanation:

Giving the following information:

Sigma Corporation applies overhead costs to jobs based on direct labor cost.

Job V:

Direct material= $5,000

Direct labor= $8,000

Overhead= $6,000

Job W:

DM= $2,500

DL= $4,000

Overhead rate= 6000/8000= $0.75 per DL $

Overhead Job W= 0.75* 4000= $3000