The FSR Company uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year 2006 are given below: Estimated manufacturing overhead Estimated direct labour hours $500,000 50,000 During 2006 the Paine Company used 60,000 direct labour hours. At the end of 2006, the company's records revealed the following information: Raw materials inventory $40,000 Work-in-process inventory 100,000 Finished goods inventory 200,000 Cost of goods sold 700,000 Manufacturing overhead 510,000 a. Calculate the budgeted overhead rate for 2006. b. Determine the amount of underapplied or overapplied overhead for 2006. c. If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company's income statement.