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Terri Rosin’s dilemma Case Study

Dis 2- Managers today hold positions of authority that make them accountable for the ethical conduct of those who report to them as well as subject to a particular code of professional ethics.  Read the case related to Terri Rosin’s dilemma with her general manager’s request add post your value-added response to each of the questions.

Q1- Explain how shaving 5% off the estimated direct labor-hours in the base for the predetermined overhead rate usually results in a big boost in net operating income at the end of the fiscal year.

Q2- Should Terri Ronsin go along with the general manager’s request to reduce the direct labor-hours in the predetermined overhead rate computation to 420,000 direct labor-hours?

Q3- Lets continue the discussion: Explain the four-step process used to compute a predetermined overhead rate.