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Dobson Manufacturing Company uses a job order cost system with manufacturing overhead applied to products on the basis of direct labor dollars. At the beginning of the most recent period, the company estimated its total direct labor cost to be $50,400 and its total manufacturing overhead cost to be $85,680.
1. Calculate the predetermined overhead rate.
2. Compute over- or underapplied overhead.
3. Prepare a statement of cost of goods manufactured and sold including the adjustment for over- or underapplied overhead.
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