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.

Answer 1

 Job V had $8,000 of direct labor, and $6,000 of overhead was applied to the job. $6,000 divided by $8,000 = .75 overhead rate. In other words, the application was based on taking $8,000 of DL x .75 rate = $6,000 overhead. 

For Job W, take $4,000 DL x same .75 rate = $3,000 

The OH cost to be applied to W at year-end is $3,000.