Biltz Company Uses a Predetermined Overhead Rate Based on Direct

question 214

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 136,000 direct labor hours were worked. The company estimated that it would incur $525,100 of manufacturing overhead during the year and that 150,800 direct labor hours would be worked. By how much was manufacturing overhead overallocated or underallocated for the year? (Round intermediary calculations to the nearest cent.)

• A)$108,720 underallocated
• B)$56,900 overallocated
• C)$56,900 underallocated
• D)$108,720 overallocated

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Definitions:

Marginal Product

The extra output or benefit received from using one additional unit of a resource.

Factor X

A term used to denote an unknown or unspecified factor in various contexts, such as productivity, growth, or other economic models.

Perfect Substitutes

Goods that can be completely replaced by another with no loss of utility to the consumer.

Inputs

The resources such as labor, materials, and capital, that are used in the production process to produce goods and services.