Question: seemed to be pleased that we could pull off such a miracle at the end of the year. This system has worked well for many

seemed to be pleased that we could pull off such a miracle at the end of the year. This system has worked well for many years, and I don't want to change it now.

Required:

Explain how shaving

5 %

off the estimated direct labor

-

hours in the allocation base for the predetermined overhead rate usually results in a big boost in net operating income at the end of the year.

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?

seemed to be pleased that we could pull off such a

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