In computing its predetermined overhead rate,Marple Company inadvertently left its indirect labor costs out of the computation.This oversight will cause:
A)Manufacturing Overhead to be overapplied.
B)the Cost of Goods Manufactured to be understated.
C)the debits to the Manufacturing Overhead account to be understated.
D)the ending balance in Work-in-Process to be overstateD.The omission of an overhead item will cause the application to be less than it should be and Cost of Goods Manufactured will be less than it should be.

Question

Quizplus · Accepted Answer

Since the indirect labor costs were not included in the computation of the predetermined overhead rate, the actual overhead costs will be higher than the applied overhead costs. This leads to an understatement of the Cost of Goods Manufactured as the applied overhead will be less than the actual overhead expenses incurred.

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