ESU Printing provides printing services to many different corporate clients. Although ESU bids on most jobs, some jobs, particularly new ones, are negotiated on a cost-plus basis. Cost-plus means that the buyer is willing to pay the actual cost plus a return (profit) on these costs to ESU.
Clara Biggio, controller for ESU, has recently returned from a meeting where ESU's president stated that he wanted her to find a way to charge most of the company's costs to projects that are on a cost- plus basis. The president noted that the company needed more profits to meet its stated goals this period. By charging more costs to the cost-plus projects and therefore fewer costs to the jobs that it bid on, the company should be able to increase its profits for the current year.
Clara knew why the president wanted to take this action. Rumours were that he was looking for a new position and if the company reported strong profits, the president's opportunities would be better. Clara also recognized that she could probably increase the cost of certain jobs by changing the basis used to allocate the manufacturing overhead.
Instructions
Answer the following questions:
(a) Who are the stakeholders in this situation?
(b) What are the ethical issues in this situation?
(c) What would you do if you were Clara Biggio?