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 $5,900 for direct materials, $9,900 for direct labor, and $6,039 for overhead on its job cost sheet.

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 $5,900 for direct materials, $9,900 for direct labor, and $6,039 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $3,200 for direct materials and $5,200 for direct labor.

  

Required:

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

Overhead cost   = $ 3,172
 

Explanation:

The overhead should be applied to value the Work in Process inventory at year-end.
 

Because $6,039 of overhead was applied to Job V on the basis of $9,900 of direct labor cost, the company’s predetermined overhead rate must be 61% of direct labor cost.

  

Job W direct labor cost (a)	$	5,200
Predetermined overhead rate (b)		0.61
Manufacturing overhead applied to Job W (a) × (b)	$	3,172