Chen Service Applied Overhead on the Basis of Direct Labor

question 12

Essay

Chen Service applied overhead on the basis of direct labor costs during the current year.Overhead applied was $16,500.Actual overhead incurred was $17,200.
(a)Prepare a journal entry to remove this difference assuming that it is not material.
(b)Instead,assume actual overhead incurred was $24,000.Describe (without computations)the alternative procedure that Chen might assuming this difference is material.

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Definitions:

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A stimulant found in various plants, commonly used to improve mental alertness and often found in coffee, tea, and soft drinks.