Normal Costing. Pete Petezah, manager of the local Pizza Shack, has asked for your advice about product costs. Pete wants you to compute predetermined overhead rates for the Pizza Shack. Pete provides the following information to you.

Late last year, Pete made the following estimates for the Pizza Shack for this year:

(1) Estimated Variable Overhead........................... $108,000

(2) Estimated Fixed Overhead.................................. $120,000

(3) Estimated Labor Hours........................................... 12,000 hours

(4) Estimated Labor Dollars per Hour.............. ,$20

(5) Estimated Output.......................................................... 120,000 pizzas

Compute the predetermined overhead rate for (1) variable overhead and (2) fixed overhead using each of the following cost drivers:

• Labor hours
• Labor dollars
• Units of output