At the Beginning of 2013, Barcroft Co

question 26

Multiple Choice

At the beginning of 2013, Barcroft Co. estimated that its total annual fixed overhead costs would amount to $25,000. Further, Barcroft estimated that its volume of production would be 2,000 units of product. Based on these estimates, Barcroft computed a predetermined overhead rate that was used to allocate overhead costs to the products made in 2013. As predicted, actual fixed overhead costs did amount to $25,000. However, actual volume of production amounted to 2,200 units of product. Based on this information alone:

• A) Products were costed accurately in 2013.
• B) Products were overcosted in 2013.
• C) Products were undercosted in 2013.
• D) The answer cannot be determined from the information provided.

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Definitions:

Shortage/Surplus

A surplus is the opposite of a shortage, occurring when the supply of a product or service exceeds its demand in a market.

Price Floor

A government- or authority-imposed minimum price set above the equilibrium price, preventing the market price from falling below a certain level.

Market Equilibrium

A situation in a market where the quantity supplied equals the quantity demanded at a certain price point.

Price Floor

A government or group-imposed price control or limit on how low a price can be charged for a product, service, or commodity, usually intended to ensure fair conditions for producers.