Hardwood plywood usually doesn’t match its nominal thickness; it’s typically undersized between 1⁄64" and 1⁄32". Therefore, when routing dadoes, a single pass with a single bit is unlikely to yield a perfect fit. (Even “undersized” panel bits sold for the purpose may not exactly suit the thickness of your particular stock.) To solve the problem, I’ve come up with a two-spacer trick to rout perfectly sized dadoes. All you need is a bit that’s a smaller diameter than the desired dado width, a couple of scraps of wood, and a straightedge fence to guide your router.
First, make a spacer that’s exactly the same thickness as your bit diameter. To set up the cut, sandwich the spacer between the fence and router base, and align the bit with the dado layout line that is nearest the fence. Secure the fence and rout your first pass. Next, replace the spacer with a scrap strip of your plywood stock, standing it on edge. Then make a second pass with the same bit to create a dado of perfect width.
—Ryan Reese, New York, New York