Austin Landers is the accountant for Sun Coast, a manufacturer of outdoor furniture that is sold through specialty stores and internet companies. Annually, Landers is responsible for reviewing the standard costs for the following year. While reviewing the standard costs for the coming year, two ethical issues arise. Use the CMA’s Code of Professional Ethics (in Chapter 1) to identify the ethical dilemma in each situation. Identify the relevant factors in each situation and suggest what Landers should recommend to the controller.
Issue 1: Landers has been approached by Minji Chung, a former colleague who worked with Landers when they were both employed by a public accounting firm. Chung recently started her own firm, Chung Benchmarking Associates, which collects and sells data on industry benchmarks. She offers to provide Landers with benchmarks for the outdoor furniture industry free of charge if he will provide her with the last three years of Sun Coast’s standard and actual costs. Chung explains that this is how she obtains most of her firm’s benchmarking data. Landers always has a difficult time with the standard-setting process and believes that the benchmark data would be very useful.
Issue 2: Sun Coast’s management is starting a continuous improvement policy that requires a 10% reduction in standard costs each year for the next three years. Adil Hassan, manufacturing supervisor of the Teak furniture line, asks Landers to set loose standard costs this year before the continuous improvement policy is implemented. Hassan argues that there is no other way to meet the tightening standards while maintaining the high quality of the Teak line.

  • CreatedApril 30, 2015
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