Biltz Company Uses a Predetermined Overhead Rate Based on Machine

question 63

Multiple Choice

Biltz Company uses a predetermined overhead rate based on machine hours to allocate manufacturing overhead to jobs. During the year, the company actually incurred manufacturing overhead costs of $582,000 and 135,000 direct labor hours were worked. The company estimated that it would incur $525,000 of manufacturing overhead during the year and that 150,000 direct labor hours would be worked. By how much was manufacturing overhead overallocated or underallocated for the year?

• A)$57,000 overallocated
• B)$57,000 undererallocated
• C)$109,500 underallocated
• D)$109,500 overallocated

---

Definitions:

Two-tailed Hypothesis Test

A statistical test in which the critical area of a distribution is two-sided and tests whether a sample is greater than or less than a certain range of values.

Test Statistic

A calculated value from sample data used to decide whether to reject the null hypothesis in hypothesis testing.

P-value

The P-value is a statistical parameter that helps to determine the significance of the results from a hypothesis test, indicating the probability of observing the results if the null hypothesis is true.

P-value

A statistic that measures the probability of obtaining an observed result, or more extreme, under the assumption that the null hypothesis is true.