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Savatey [412]
3 years ago
15

Exercise 2-10 Applying Overhead Cost to a Job [LO2-2] Sigma Corporation applies overhead cost to jobs on the basis of direct lab

or 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? 2. How will the costs included in Job W’s job cost sheet be reported within Sigma Corporation’s financial statements at the end of the year? Raw Materials Work-in-Process Finished Goods
Business
1 answer:
OlgaM077 [116]3 years ago
6 0

Answer:

See explanations below.

Explanation:

1. Yes. Overhead should be applied to job W at year-end. Overhead is applied to every jobs whether or not they are completed at year end.

b. To calculate the amount of overhead to be applied to job W, we need to calculate first the overhead application rate based on direct labor cost through job V.

Direct labor cost. $8,000

Overhead applied $6,000

Overhead rate = [ Overhead applied / Direct labor cost ] × 100

= [6,000/8,000] × 100

= 75%

Overhead to be applied to job W

Direct labor cost $4,000

Overhead rate 75%

Overhead to be applied = $3,000

It therefore means that $3,000 should be applied to job W.

2. Because job W was not completed at the year end, it would then be included in the work in process inventory in the financial statements of Sigma Corporation at year end.

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Answer:

Variable overhead efficiency variance= $544 favorable

Explanation:

Giving the following information:

Variable overhead 0.90 hours $ 3.40 per hour

Actual output 4,400 units

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<u>To calculate the variable overhead efficiency variance, we need to use the following formula:</u>

<u></u>

Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate

Variable overhead efficiency variance= (3,960 - 3,800)*3.4

Variable overhead efficiency variance= $544 favorable

Standard quantity= 4,400*0.9= 3,960

8 0
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Your company has total wages of $321,000. Your revenue is $976,000. You have just read an industry journal that suggests that wa
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Macy is a very creative person. Often, when trying to generate a novel or useful idea, she spends several days "mulling over" th
meriva

Answer:

Correct answer is (E) incubation

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Have a Warm and Wonderful Day!!
4 0
3 years ago
Department F had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $13,400. Of
Rufina [12.5K]

Answer:

a.$3.35

Explanation:

The first step in determining  conversion cost per unit is to calculate the Total Equivalent units of production for Conversion Costs.

Conversion Costs

Units Completed and transferred (15,000 × 100%) = 15,000

Units in Ending Work In Process (3,000 × 75%)      =  2,250

Total Equivalent units of production                        =  17,250

The next step is to determine the total conversion cost of production incurred during the period.

Conversion Costs

Conversion Costs in Beginning Work In Process                               $4,800

Conversion Costs added during the period ($33,000 + $20,000) $53,000

Total Conversion Costs                                                                      $57,800

Finally calculate the conversion cost per unit

Conversion cost per unit = Total Conversion Costs  / Total Equivalent units of production

                                         = $57,800 / 17,250

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