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 $6,000 for direct materials, $9,900 for direct labor, and $7,128 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $3,000 for direct materials and $4,900 for direct labor.

Required:
Calculate the overhead cost be added to Job W at year-end

Answer 1

$6,811

Step-by-step explanation:

Job V had $9,900 of direct labor and $7,128 of overhead was applied to the job

= $9,900 ÷ $7,128

= $1.39 overhead rate.

This means that the application was based on taking $9,900 of Direct labor × $1.39 rate = $7,128 overhead

For Job W, take $4,900 DL × same $1.39 rate = $6,811

Therefore, the overhead cost to be applied to job w at year end is $6,811