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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

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Answer:

Dr Work in process inventory 540

Cr Factory overhead 540

Explanation:

Preparation of the journal entry

Based on the information given about Dream House Builders, Inc. the Complete necessary January 31 journal entry to apply overhead will be to Debit Work in process inventory with the amount of 540 and Credit Factory overhead with the same amount of 540

Jan-31

Dr Work in Process Inventory 540

[($20,000 / $100,000) x $2,700]

(0.2×$2,700=$540)

Cr Factory Overhead 540

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