Question

Exercise 2-10 Applying Overhead Cost to a Job [LO2-2] 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, $8,400 for direct labor, and $6,216 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $4,000 for direct materials and $5,200 for direct labor. Required: 1a. Should any overhead cost be applied to Job W at year-end?

Answer 1

Overhead= $3,848

Step-by-step explanation:

Giving the following information:

Sigma Corporation applies overhead costs to jobs based on direct labor cost. Job V, which was started and completed during the current period, shows charges of $5,000 for direct materials, $8,400 for direct labor, and $6,216 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $4,000 for direct materials and $5,200 for direct labor.

Estimated manufacturing overhead rate= 6216/8400= $0.74 per direct labor dollar.

Job W:

Overhead= 5,200*0.74= $3,848