Problem:

Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 34,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $568,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Logan's actual manufacturing overhead for the year was $700,553 and its actual total direct labor was 34,500 hours.

Required:

Question: Compute the company's predetermined overhead rate for the year.

Note: Explain all calculation and formulas.