PROBEM 1

Kitco Inc. is a specialty manufacture of machine parts for various clients and uses a job cost system to value its work in process, finished goods inventories and cost of goods sold. The company uses a normal overhead rate to applied manufacturing overhead to the parts it manufacturers. It is the end of the fiscal year and the cost accounting department and the manufacturing manager are working on developing a new predetermined Manufacturing Overhead rate for the entire manufacturing plant. They have decided to use direct labor hours as the cost driver for applying overhead to each job. The company has budgeted sales of $21,000,000 for the next fiscal year. The direct labor hours budgeted for the next fiscal year to reach the budgeted sales goal is 320,000 hours. The budgeted manufacturing fixed overhead for next fiscal year is $10,000,000 and the variable manufacturing overhead is $6,000,000.
Required:
From the information above, calculate the predetermine manufacturing overhead rate to be used for the next fiscal year.