A plantwide predetermined overhead rate based on direct labor-hours results in high overhead costs for products with a high direct labor-hour content and low overhead costs for products with a low direct labor-hour content.

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A plantwide predetermined overhead rate based on direct labor-hours assumes that overhead costs are directly proportional to direct labor-hours. Therefore, products with a high direct labor-hour content will be allocated more overhead costs, while products with a low direct labor-hour content will be allocated less overhead costs. This can result in high overhead costs for some products and low overhead costs for others.

A Plantwide Predetermined Overhead Rate Based on Direct Labor-Hours Results