Biltz Company Uses a Predetermined Overhead Rate Based on Direct

question 244

Multiple Choice

Biltz Company uses a predetermined overhead rate based on direct labor 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)$109,500 underallocated
• B)$57,000 overallocated
• C)$57,000 underallocated
• D)$109,500 overallocated

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Definitions:

Marginal Costs

The extra expense incurred from making one more unit of a product or service.

Average Cost

The total cost of production divided by the number of goods produced, showing the cost of producing each unit.

Marginal Cost

The cost incurred to produce one additional unit of a product or service.

Average Costs

The total cost of production divided by the quantity produced, indicating the cost per unit of output.