Information from the batch cost sheet is used to calculate the production cost and unit cost as follows. Production overhead = Direct labor hours x Predetermined rate Production overhead = 30 x 12.00 = 360 Batch Cost Calculation. The first step is to calculate the production overhead to be applied to the batch based on the predetermined rate.Learning Objective: 03-01 Compute a predetermined overhead rate. Topic: Computing Predetermined Overhead Rates. Predetermined overhead rate = $68,000 ÷ 16,000 machine-hours = $4.25 per machine-hour. Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base.The assumption that the more direct labor your employees work, the more overhead your company incurs made sense in the days before automation, but today completely automated factories operate with little or To gain a better understanding of these factors, managerial accountants use activity-based costing. A wide variety of factors can cause overhead to increase.Then take the total overheads cost and divide by the allocation base determined. This formula of the predetermined overhead rate is purely based on estimates. A predetermined overhead rate is an allocation rate that is given for indirect manufacturing costs that are involved in the production.