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 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) below $500,000 overapplied
(b) below $1,000,000 overapplied
(c) below $500,000 underapplied
(d) below $1,000,000 underapplied

The correct option here is B)

Explanation:

The current year forecast for Thomlin company is  -

Overhead = $15,000,000

Machine hours = 300,000 hours.

From this given information , we can calculate the rate per hour

Rate per hour = overhead / machine hour

= $15,000,000 / 300,000

= $50

Now by multiplying this rate per hour by the actual machine hours -

$50 x 330,000

= $16,500,000 ( applied overhead )

so therefore applied overhead - actual overhead

      = $16,500,000 - $16,000,000

      = $ 500,000

So these overheads are over applied by $500,000

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