2:47 Unit 3 Discussion, Ethics & Accounting *Note: This discussion requires you to apply your knowledge calculating predetermined overhead rates and how the predetermined rates affect product costs and ultimately net income/loss. See the explanation below of points assessed. Scenario: You were recently hired as comptroller for a division in a prominent manufacturing company. You have been asked to calculate the predetermined overhead rate for your division to use in the upcoming year. It is important that the rate be accurate because any resulting over- applied or under-applied overhead is closed out to Cost of Goods Sold at the end of the year. The allocation base for your division is machine hours. You began by estimating the total manufacturing overhead costs you expected the division to incur in the upcoming year. Then you divided that figure by the estimate of the total machine hours that the production manager thought would be required to produce the division's product and arrived at the pre-determined overhead rate for the division. But when you took the rate to the General Manager, he asked you to rework the calculations and reduce the machine hours estimated by the production manager from 505,000 to 484,800. He explained that it has always been done that way and at the end of the year, when adjusting entries are made, the division appears to have had a large increase in net operating income. Vour initial noct ic duo by 11.50 nm Tuaeday otc.instructure.com 2:47 increase in net operating income. Your initial post is due by 11:59 p.m. Tuesday, March 22, 2022 and provide your response to: 1. BRIEFLY explain why reducing the estimated machine hours in the base for the predetermined overhead rate results in a large increase of the net operating income at the end of the fiscal year? (Include discussion about how how such a change affects the rate, and what happens to product costs if that rate is applied throughout the year, and any adjustment needed at the end of the fiscal year, and then use this information in your explanation.) 2. BRIEFLY explain why you should or should not comply with the manager's request? (Your response should recognize and explain an ethical dilemma.) For your follow-up response, due by 11:59 p.m. on Thursday, March 24, 2022 Read another student's post and comment/reply to their findings. Your response should reflect substantive thought and not merely state a superficial agreement such as "good job, I agree" or other similar replies. Grade Rubric: Worth 10 points=5 points for participation; 1 point for explaining how the change affects the rate: 1 point for explaining the effect the changed rate has on the product costs throughout the financial period; 1 point for explaining any needed adjustment entry; 1 point for describing any ethical problem and otc.instructure.com