A company uses a job order cost system with manufacturing overhead applied to products on the basis of direct labor hours. For the upcoming year, the company estimated total manufacturing overhead cost at $723,600 and total direct labor hours of 40,200. During the year, actual manufacturing overhead incurred was $703,200 and 40,700 direct labor hours were used.

Required:

1. Calculate the predetermined overhead rate.
2. Calculate how much manufacturing overhead will be applied to production.
3. Is overhead over- or underapplied? By how much?
4. What account should be adjusted for over- or underapplied overhead? Should the balance be increased or decreased?