Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was startedand completed during the current period, shows charges of $5,000 for direct materials, $8,000 for directlabor, and $6,000 for overhead on its job cost sheet. Job W, which is still in process at year-end, showscharges of $2,500 for direct materials and $4,000 for direct labor.Required:Should any overhead cost be added to Job W at year-end? If so, how much? Explain.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Sigma Corporation applies
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
charges of $2,500 for direct materials and $4,000 for direct labor.
Required:
Should any overhead cost be added to Job W at year-end? If so, how much? Explain.
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