Read first photo, reply to Benton P.

For this Discussion Board, you will be using the following ethical dilemma: 36 Terri Ronsin had recently been transferred to the Home Security Systems Division of National Home Products. Shortly after taking over her new position as divisional controller, she was asked to develop the division's predetermined overhead rate for the upcoming year. The accuracy of the rate is important because it is used throughout the year and any overapplied or underapplied overhead is closed out to Cost of Goods Sold at the end of the year. National Home Products uses direct labor-hours in all of its divisions as the allocation base for manufacturing overhead. To compute the predetermined overhead rate, Terri divided her estimate of the total manufacturing overhead for the coming year by the production manager's estimate of the total direct labor-hours for the coming year. She took her computations to the division's general manager for approval but was quite surprised when he suggested a modification in the base. Her conversation with the general manager of the Home Security Systems Division, Harry Irving, went like this: Ronsin: Here are my calculations for next year's predetermined overhead rate. If you approve, we can enter the rate into the computer on January 1 and be up and running in the Job-order costing system right away this year. Irving: Thanks for coming up with the calculations so quickly, and they look just fine. There is, however, one slight modification I would like to see. Your estimate of the total direct labor-hours for the year is 440,000 hours. How about cutting that to about 420,000 hours? Ronsin: I don't know if I can do that. The production manager says she will need about 440,000 direct labor- hours to meet the sales projections for the year. Besides, there are going to be over 430,000 direct labor hours during the current year and sales are projected to be higher next year. Reply Post* Stance: When it is time to complete the Reply Post*, you will need to read through your classmate's original thoughts. Find one Original Post* to reply to. For the Reply Post*, you will be arguing against the general manager's request to reduce the direct labor-hours in the predetermined overhead rate computation to 420,000 direct labor-hours. Remember that for the Reply Post*, you must not only argue your case as to why the route you suggest is best, but you must also produce counter arguments to the point(s) made in the Original Post Displayin Benton Patterson DB 3 Dy underestimating the the direct labor hours the predetermined overhead rate will be higher. The increase sugested by the manager would create a high increase in produce costs for the products. If the company uses a markup of sayo, this would increase the sales price of the product. The christmas bonus the increased sales price created by the light adjustment to the direct labor housed which increases overhead tate to calculate casts Corporate will be very pleased with the tumbers at the end of the year, and the matters will be happy with the extra cheristmas bons money. WinWin Reply Select: Nie Mediction