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

question 17

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:

Traded Stock

Shares of a company that are bought and sold in public markets, such as stock exchanges, representing ownership interests in the corporation.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date at a predetermined price.

Buy Back

The process by which a company repurchases its own shares from the marketplace, reducing the amount of outstanding stock.

Maturity

The time at which a financial instrument (such as a bond, loan, or investment) becomes due for payment or expires.