Ethics challenge [LO4 - CC7]

Brief Exercises 1. BRIEF EXERCISE 3-1 Assigning Process versus Job-Order Costing (L01 - CC1) Which method of determining product costs-job-order costing or process costing-would be more each of the following situations? A Husky oil refinery. 2. A shop that customizes vans. 3. An Elmer's glue factory. 4. A facility that makes Minute Maid frozen orange juice. 5. A Scott paper mill. 6. A custom home builder. 7. A textbook publisher, such as McGraw-Hill. 8. A manufacturer of specialty chemicals. 9. A law office. 10. A Firestone tire manufacturing plant. 11. An advertising agency. 12. An auto repair shop. answer in another ETHICS CHALLENGE [LO4 - CC7] M. K. Gallant is president of Kranbrack Corporation, a company whose shares are traded on a national exche In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the compe earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and G concluded within two weeks of the end of the fiscal year that it would ultimately be impossible to repor increase in earnings as large as predicted unless some drastic action were taken. Accordingly, Gallant has od that wherever possible, expenditures should be postponed to the new year-including cancelling or postpa orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertisin travel. Additionally, Gallant ordered the company's controller to carefully scrutinize all costs that are cum classified as period costs and reclassify as many as possible as product costs. The company is expected substantial inventories of work in process and finished goods at the end of the year. Required: 1. Why would reclassifying period costs as product costs increase this period's reported earnings? 2. Do you believe Gallant's actions to be ethical? Why, or why not? TCA MAISDV IMAATIALE