Apples, Inc. uses a predetermined factory overhead rate based on machine hours. For the month of May, Apples budgeted overhead was $400000 (Variable $250000; Fixed $150000) based on an estimated volume of 100000 machine hours. Actual overhead amounted to $440000 with actual machine hours totaling 108000. What was the overapplied or underapplied overhead?

Select one:

a.

$8000 overapplied

b.

$40000 overapplied

c.

$40000 underapplied

d.

$8000 underapplied