The denominator in a pre-determined overhead rate is usually

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The denominator in a pre-determined overhead rate is usually the estimated activity level, such as direct labor hours, direct labor cost, or machine hours, since it is used to allocate the estimated overhead costs to the products or services. Actual overhead costs and actual activity level are not used to calculate the pre-determined overhead rate, and estimated overhead costs may be part of the numerator of the rate.

The Denominator in a Pre-Determined Overhead Rate Is Usually