Tom's Tool & Die uses a predetermined factory overhead rate based on machine-hours. For August, Tom's budgeted overhead was $234,000 based on a budgeted volume of 39,000 machine-hours. Actual overhead amounted to $230,000 with actual machine-hours totaling 38,500What was over - or underapplied manufacturing overhead in August?

Overapplied overhead is $1,000.

Explanation:

predetermined factory overhead rate=Budgeted overhead/Budgeted volume

= (234,000/39.000) = $6/machine hour

Hence applied overhead = predetermined factory overhead rate*Actual volume

= (6*38.500) = $231.000

Hence since applied overhead is greater than actual overhead;

overapplied overhead = (231,000-230.000) = $1,000.