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Umnica [9.8K]
2 years ago
13

Dream House Builders, Inc. applies overhead by linking it to direct labor. At the start of the current period, management predic

ts 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.
Required:
Write the journal entry.
Business
1 answer:
sineoko [7]2 years ago
8 0

Answer:

Explanation:

To solve this question, we need to calculate the predetermined overhead rate first and this will be:

= Estimated overhead / Direct labor cost

= $20,000 / $100,000

= 20% of cost of direct labor

Then we calculate the factory overhead which will be:

= Direct Labor × Predetermined overhead rate

= $2700 × 20%

= $540

Then, the journal entry will be:

31 Dec:

Debit Work in Process $540

Credit: Factory overhead $540

(To record overhead applied).

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The average fixed cost curve a. always declines with increased levels of output. b. always rises with increased levels of output
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3 years ago
Your friend Wanda established her gourmet dog treat business, Salty Pawz, using personal funds, since she initially sold her pro
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Based on the advantages and disadvantages for each type of financing mentioned below, the best method for financing the expansion for Wanda's business is taking a loan (e.g. 1 year).

<u>Take a term loan (e.g. 1 year)</u>

A term loan is best described as an amount provided by the bank for a fixed amount and a agreed payment schedule with an interest rate either fixed or floating.

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The disadvantage is that when loans are taken, then the amount (principal) and interest is to be repaid even if the loan is not being used. Another possible disadvantage is that a loan can be obtained if you have any asset (such as a house or car) to be kept as security. This is a guarantee in the likely event the bank's loan is not repaid on time.

<u>Look for investors to fund her business in exchange for ownership in the company</u>

This means finding individuals/institutions to provide financing as capital to be used in business for expansion.

Unlike a bank loan, here the investors accept the risk that if the business fails then their financing would be lost. Therefore, if the business ends up in losses then the amount is not required to be returned to their respective financiers. Another advantage is that you don't require any credit history to earn financing through investors.

The main disadvantage is that the sharing (profits) are divided between multiple investors based on their investment or as per their agreed sharing ratio. Moreover, the new investors might prefer to take more risks for a business to grow and which means that the stakes are always high.

In conclusion, Wanda is working on a small business and which is expanding at a slow rate with the risk being kept at a bare minimum. In which case taking a loan with amount and duration being set at a point where she would be able to return the loan acquired, is a better financing option for Wanda's business.

Read related link on:

brainly.com/question/18403244

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