E 13. The overhead costs that Lucca Industries, Inc., used to compute its overhead rate for the past year are as follows:

Indirect materials and supplies $ 79,200 Repairs and maintenance 14,900 Outside service contracts 17,300 Indirect labor 79,100 Factory supervision 42,900 Depreciation–machinery 85,000 Factory insurance 8,200 Property taxes 6,500 Heat, light, and power 7,700 Miscellaneous overhead 5,760 Total overhead costs $346,560 The allocation base for the past year was 45,600 total machine hours.
For the next year, all overhead costs except depreciation, property taxes, and miscellaneous overhead are expected to increase by 10 percent. Depreciation should increase by 12 percent, and property taxes and miscellaneous overhead are expected to increase by 20 percent. Plant capacity in terms of machine hours used will increase by 4,400 hours.
1. Compute the past year’s overhead rate. (Carry your answer to three decimal places.)
2. Compute the overhead rate for next year. (Carry your answer to three decimal places.)
Computation and Application of Overhead Rate