Answer
When automated equipment replaces direct labor, overhead increases and direct labor decreases. This results in an increase in the predetermined overhead rate.
Work Step by Step
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Managerial Accounting (15th Edition)
by Garrison, Ray; Noreen, Eric, Brewer, Peter
Published by
McGraw-Hill Education
ISBN 10:
007802563X
ISBN 13:
978-0-07802-563-1
Chapter 3 - Job-Order Costing - Questions - Page 113: 3-13
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