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 $6,300 for direct materials, $8,600 for direct labor, and $5,848 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $4,300 for direct materials and $5,400 for direct labor. Required:
Calculate the overhead cost be added to Job W at year-end.

Allocated MOH= $3,672

Explanation:

Giving the following information:

Job V:

DM= $6,300

DL= $8,600

Overhead= $5,848

Job W:

DM= $4,300

DL= $5,400

First, we need to calculate the predetermined overhead rate based on Job V:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

5,848 = Estimated manufacturing overhead rate*8,600

Estimated manufacturing overhead rate= 5,848/8,600

Estimated manufacturing overhead rate= $0.68

Now, the allocated overhead to Job W:

Allocated MOH= 0.68*5,400

Allocated MOH= $3,672

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