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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:.
1. understate the predetermined overhead rate.
2. overstate the predetermined overhead rate.
3. there will be no effect on the predetermined overhead rate.
4. Can't tell from the information provided.
Answers: 1
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Magnum Company uses direct labor cost as a basis for computing its predetermined overhead rate. In c...
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