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

Respuesta :

Answer:

$3,000

Explanation:

Predetermined Overhead rate = Total estimated overhead cost  / Allocation base

Predetermined Overhead rate = Total estimated overhead cost/Total estimated labor cost * 100

Predetermined Overhead rate = 6,000/8,000 * 100

Predetermined Overhead rate = 0.75 * 100

Predetermined Overhead rate = 75%

Overhead cost to be added to Job W at the year-end = Direct labor cost for Job W * Predetermined overhead rate = $4,000 * 75% = $3,000