Question: Gorman Company applies overhead cost to jobs on the basis
Gorman Company applies overhead cost to jobs on the basis of direct labour cost. Job A, which was started and completed during the current period, shows charges of $6,000 for direct materials, $15,000 for direct labour, and $7,500 for overhead on its job cost sheet. Job B, which is still in process at year-end, shows charges of $2,500 for direct materials and $4,000 for direct labour. Should any overhead cost be added to Job B at year-end? Explain and calculate the amount, if necessary.
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