PROBLEM 2-14. Selection of an Overhead Allocation Base [LO 4, 5] Wolf Manufacturing expects the following overhead costs in the current year:

Indirect material$ 45,000

Indirect labor55,000

Depreciation of machinery160,000

Repair and maintenance on machinery135,000

Utilities and taxes55,000

Total$450,000

It expects to use 25,000 direct labor hours at a cost of $525,000 and 15,000 machine hours during the year.

REQUIRED

Justify the selection of an appropriate allocation base and calculate the predetermined overhead allocation rate.