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Damm [24]
3 years ago
14

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
Business
1 answer:
finlep [7]3 years ago
6 0

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

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