Beal Company Uses Direct Labor Cost as a Basis for Computing

question 42

Multiple Choice

Beal Company uses direct labor cost as a basis for computing its predetermined overhead rate.In computing the predetermined overhead rate for 2012,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.Misclassifying the direct labor will cause the numerator to be larger and the denominator to be smaller,thus overstating the rate.

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Definitions:

Conformity

Conformity is the act of matching attitudes, beliefs, and behaviors to group norms, policies, or societal expectations.

Autokinetic Effect

A visual perception phenomenon where a stationary point of light in a dark environment appears to move due to involuntary eye movements.

Relational Proposition

A statement that establishes a relationship between two or more concepts, often used to understand how individuals perceive relationships in the world.

Asch's Studies

A series of experiments that demonstrated the power of conformity in groups, where individuals often agreed with an incorrect answer to match the majority's view.