Answer:
1. 9.50 per machine hour
2.  $1,040
3. $37,000
; Increase
Explanation:
1. Fixed predetermine overhead rate: 
= Fixed manufacturing overhead cost ÷ Machine-hours required
= 650,000 ÷ 100,000 
= 6.5 per machine hour
Variable predetermine overhead rate = 3 per machine hour
Total predetermine overhead rate: 
= Fixed predetermine overhead rate + Variable predetermine overhead rate
= (6.5 + 3) 
= 9.50 per machine hour
2. Total manufacturing cost:
= Direct material + Direct labor + Manufacturing overhead 
= $450 + $210 + (40 × 9.5)
= $450 + $210 + $380
= $1,040
3. Applied overhead: 
= Total machine hours × Total predetermine overhead rate
= 146,000 × $9.50 
= $1,387,000
Actual overhead = $1,350,000
Over applied overhead: 
= Applied overhead -  Actual overhead
= $1,387,000 - $1,350,000 
= $37,000
If this amount were closed out entirely to cost of goods sold then net operating income will be increase.