Selwyn's Service Applied Overhead on the Basis of Direct Labor

question 115

Essay

Selwyn's 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 only $24,000. Describe (without computations) the alternative procedure that Selwyn might use to record this material difference.

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Definitions:

Specified

Specified refers to being explicitly stated, defined, or detailed.

Sample Linear Regression Model

A statistical model that estimates the relationship between a dependent variable and one or more independent variables using a linear equation.

Slope Coefficient

In linear regression, a measure of the rate of change in the dependent variable for every one unit change in an independent variable.

Average Change

The mean difference between successive measurements in a series of data points, indicative of a trend or variation over time.