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

question 72

Multiple Choice

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.
• Not including indirect labor in the Manufacturing Overhead total will result in a lower predetermined overhead rate.When indirect labor is debited to Manufacturing (actual)it will not be relieved (credit).

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Definitions:

Beginning Cash Balance

The amount of cash a company has at the start of a financial period.

Short-Term Loan

A loan scheduled to be repaid in less than a year, typically used for immediate or emergency financial needs.

Net Cash Flow

The difference between a company's cash inflows and outflows over a specific period of time.

Interest Payment

Interest Payment refers to the regular payment that a borrower makes to a lender for the use of borrowed money, typically part of the debt's service payments.