Chapter 2, Problem 1E

To determine

Predetermined Overhead Rate: It is calculated at the beginning of the year on the basis of estimated level of production for such period by the company. The formula to calculate is Predetermined Overhead Rate as follows:

$\text{Predetermined Overhead Rate = }\frac{\text{Estimated Fixed Costs}}{\text{Estimated Direct Labor Hours}}$

The predetermined overhead rate based on the estimated annual level of production of the company.