Problem
Brown Corporation manufacturers brown products, and uses a traditional manufacturing overhead allocation method. They are currently in the process of calculating the current period predetermined overhead rate. The information needed is provided below.
i. Prior year total manufacturing overhead costs: $650,000
ii. Prior year total cost driver: 60,000 machine hours
iii. Expected increase in direct material costs: $34,000
iv. Expected increase in overhead costs: $50,000
v. Expected change in machine hours: 15% decrease
Using the information provided, calculate the predetermined overhead rate for the period.