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:

Faultline

Hypothetical dividing lines within a team or group that split members into subgroups based on one or more attributes.

Cross-functional Teams

Teams composed of members from different departments or areas of expertise within an organization, working together toward a common goal and fostering innovation through diverse perspectives.

Unique Knowledge

Information or insights that are possessed by an individual or group, which are not widely known or shared among others.

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The practice of combining varied pieces of knowledge from different sources or disciplines to create new insights or solutions.