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 $5,800 for direct materials, $9,000 for direct labor, and $5,490 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 $5,600 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

Answer 1

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Job V, which was started and completed during the current period, shows charges of $5,800 for direct materials, $9,000 for direct labor, and $5,490 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 $5,600 for direct labor.

1) Yes, because there are costs that can't be located as direct material and direct labor and aren't important enough to have their own location cost. But, in the sum they are relevant.

Overhead rate= 5490/9000= $0.61 per direct labor dolar.

Overhead Job W= 0.61* 5600= $3416

2) It will be reported as ending work in process for $13,016