In computing its predetermined overhead rate,Marple Company inadvertently left its indirect labor costs out of the computation.This oversight will cause:

Question

Quizplus · Accepted Answer

Since Marple Company omitted indirect labor costs from the computation of the predetermined overhead rate, the rate will be artificially low. This means that the amount of overhead applied to the Cost of Goods Manufactured will be less than the actual amount of overhead incurred during the period, resulting in an understatement of the true cost of goods manufactured. Therefore, the correct choice is B, the Cost of Goods Manufactured will be understated.

In Computing Its Predetermined Overhead Rate,Marple Company Inadvertently Left Its