Dream House Builders, Inc. applies overhead by linking it to direct labor. At the start of the current period, management predicts total direct labor costs of $100,000 and total overhead costs of $20,000. On January 31, the direct labor for this job equals $2,700. Complete the necessary January 31 journal entry to apply overhead by selecting the account names and dollar amounts from the drop-down menus.

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Answer:

Goods in Process Inventory -- Job ....... $540 Dr

Factory Overhead ................................................... $540 Cr

Explanation:

Factory Overhead = (Total Overhead Costs / Total Direct Labor Costs) x Direct Labor

Factory Overhead = ($20,000 / $100,000) x $2,700  

Factory Overhead = 0.2 x $2,700  

Factory Overhead = $540

On January 31,  the journal entry to apply overhead is

Goods in Process Inventory -- Job ....... $540 Dr

Factory Overhead ................................................... $540 Cr

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Answer:

Please see attachment

Explanation:

Please see attachment

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