Magnum Company Uses Direct Labor Cost as a Basis for Computing

question 94

Multiple Choice

Magnum Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for 2020, the company misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification will be to:

• A) understate the predetermined overhead rate.
• B) overstate the predetermined overhead rate.
• C) there will be no effect on the predetermined overhead rate.
• D) Can't tell from the information provided.

---

Definitions:

Infants

Refers to very young children from birth up to one year of age, focusing on their development, needs, and care.

Categorization

The process of recognizing, differentiating, and understanding objects, concepts, or experiences by grouping them based on common characteristics.

Memory

The cognitive process of encoding, storing, and retrieving information, critical for learning and recalling past experiences.

Process

Refers to a series of actions, changes, or functions bringing about a result or outcome, often detailed in steps or stages.