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:

1. Should any overhead cost be applied to Job W at year-end? If so, how much? Explain.

2. How will the costs included in Job W’s job cost sheet be reported within Sigma Corporation’s financial statements at the end of the year?