Chapter 3: Job Order Costing Problem 1 Pennsylvania Hotel Fernandine Corret is the Director of Events of the Pennsylvania Hotel in Washington D.C. When she quotes the price of a convention to a potential customer she includes the costs that the food and beverage department quotes her on a per conference attendee basis and an estimate of the hourly workers that will be assigned to attend different convention-related tasks (such as waiting tables, replenishing refreshment stations, or cleaning the facilities). The Event Management department overhead is determined by the hotel CFO. When allocating overhead to specific conventions Corret uses the number of rooms blocked by the convention as allocation basis. Corret was reviewing the following information for the Event Management Department in 2021, the last year where the convention business had a "normal" performance: Food and beverage costs Budget for 2021 $6,000,000 2,200,000 Actual Results for 2021 $5,6800,000 Direct labor costs Overhead costs Hotel room nights blocked for conventions. 7,500,000 100,000 2,150,000 7,700,000 99,500 1. Compute the predetermined overhead rate and the actual rate (calculated with actual performance numbers) 2. During August, the department controller recorded the following convention cost sheet for the global convention of the American Managerial Accounting Association, a private- equity group based in Lima, Peru: Direct materials used Direct manufacturing labor costs Hotel room nights blocked $120,000 $90,000 2,000 Compute the cost of Managerial Accounting Association convention using (a) the predetermined overhead allocation rate and (b) the actual overhead allocation rate. 3. Compute the difference in overhead allocated under both methods. Would you say there is an over-allocation or an under-allocation?