Guadalajara Glass Company, a Mexican manufacturer, produces a glass product that has a direct materials cost (in pesos) of M$21 per unit and a direct labor cost of M$14 per unit. Factory overhead is applied to production on the basis of machine hours with five units of product produced each machine hour. Under normal conditions, the company operates at 150,000 machine hours each year and produces 750,000 units of product. At this level, the company bud- geted M$900,000 for variable overhead and MS600,000 for fixed overhead.

Required:

1. Compute the overhead rate per machine hour at normal operating volume.

2. Determine the total unit cost of the product at the normal operating volume.

3. If normal operating volume were 200,000 machine hours, what would be the overhead rate per machine hour?

4. Suppose the company operated at 200,000 machine hours and incurred over- head costs totaling M$1,960,000 during the year. Would the overhead be overapplied or underapplied? Compute the amount.