At the beginning of the year,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 during the year.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 during the year.
B) Products were overcosted during the year.
C) Products were undercosted during the year.
D) The answer cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The predetermined overhead rate was based on an estimated production volume of 2,000 units, but the actual production was 2,200 units. This means the fixed overhead cost per unit would be lower than estimated, leading to products being overcosted because the overhead allocated per unit would be higher than it should have been based on the actual production volume.

At the Beginning of the Year,Barcroft Co