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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.


Definitions:

Simple Random Sample

A segment of a statistical population in which every individual posseses the same likelihood of being selected.

Normal Population

A statistical population that follows a normal distribution, where the data tends to cluster around a mean value.

Population Mean

The average value of a set of characteristics within a specified entire population.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how spread out the data points are from the mean.

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