Joakim Keynes is the manager of the Repairs and Maintenance Department of JB Industries. He is responsible for preparing his department’s annual budget. Most managers in the company inflate their budget numbers by at least 10 percent because their bonuses depend upon how much below budget their departments operate. Keynes turned in the following information for his department’s budget for next year to the company’s budget committee:

Because the figures for next year are 20 percent above those in this year’s budget, the budget committee questioned them. Keynes defended them by saying that he expects a significant increase in activity in his department next year.
What do you think are the real reasons for the increase in the budgeted amounts? What ethical considerations enter into thissituation?

  • CreatedMarch 26, 2014
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