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The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is
a. $1,000,000 over appliedb. $1,000,000 under appliedc. $500,000 over appliedd. $500,000 under applied

Respuesta :

Answer:

d. $500,000 under applied

Explanation:

The computation is shown below:

First, Calculate the predetermined overhead rate per hour which equals to

=  (Estimated Overhead cost ÷ estimated machine hours)  

= ($15,000,000 ÷ 300,000 hours)

= $50 per hour

So, the applied overhead equals to

=  Predetermined overhead rate per hour × actual machine hours

= $50 per hour × 330,000 hours

= $ 16,500,000

So, the over/under applied overhead equals to

= Applied overhead - actual overhead

=  $16,500,000 - $16,000,000

= $500,000 under applied  

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