Marcus Lim, the cost accountant for Hi-Power Mower Company, recently installed activity-based costing at Hi-Power's St. Louis
Question:
Before completing his analysis and reporting these results to management, Marcus is approached by his friend Ray Pon, who is the production manager for the 18-horsepower Supercut model. Ray has heard from one of Marcus's staff about the new product costs and is upset and worried for his job because the new costs show the Supercut to be losing, rather than making, money.
At first Ray condemns the new cost system, whereupon Marcus explains the practice of activity-based costing and why it is more accurate than the company's present system.
Even more worried now, Ray begs Marcus, "Massage the figures just enough to save the line from being discontinued. You don't want me to lose my job do you? Anyway, nobody will know." Marcus holds firm but agrees to recompute all his calculations for accuracy before submitting his costs to management.
Instructions
(a) Who are the stakeholders in this situation?
(b) What, if any, are the ethical considerations in this situation?
(c) What are Marcus's ethical obligations to the company? To his friend?
Stakeholders
A person, group or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees,...
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Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-0470477144
5th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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