Chen Service Applied Overhead on the Basis of Direct Labor

question 171

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 perform assuming this difference is material.

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Definitions:

Long-term Memory

A type of memory capable of storing information for an extended period of time, from hours to a lifetime.

Short-term Memory

The capacity for holding a small amount of information in mind in an active, readily available state for a short period of time.

Rehearsal

A practice session in preparation for a public performance (as of a play or speech) or a process in memory retention involving the repetition of information.

Short-term Memory

Is a cognitive system with a limited capacity that is responsible for temporarily holding information available for processing.