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.

Question

Quizplus · Accepted Answer

The predetermined overhead rate was based on an estimated production of 2,000 units, but actual production was 2,200 units. This means the overhead cost per unit was lower than estimated, leading to overcosting per unit.

At the Beginning of 2013, Barcroft Co