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Closing a division just because it is reporting losses is not always the right course of action. These financial setbacks might arise from how costs are allocated rather than actual deficient performance in operations. Evaluating a division should extend beyond examining net income alone; managers also need to assess the contribution margin, as well as a metric that indicates whether the division can cover its variable costs and still contribute toward fixed expenses (Kimmel et al., 2021). Even if it looks unprofitable on paper, a positive contribution margin indicates potential value for the company overall. Moreover, qualitative aspects such as long-term strategic importance, workforce stability, customer relationship development, and market positioning play crucial roles in deciding whether to shut down any part of an organization (Kimmel et al., 2021). In this instance, redistributing fixed costs among the divisions was unethical. Although managers have some discretion over cost allocation, manipulating financial outcomes to mislead stakeholders undermines the integrity of financial reporting. By transferring fixed costs to the plumbing division, Blake Romney made other divisions seem more profitable, engaging in manipulation for personal or strategic advantage. This action breaches ethical accounting standards that prioritize fairness, consistency, and accuracy in financial disclosures (Kimmel et al., 2021). Misleading the board or investors by altering reported performance is not only unethical but could also harm trust and organizational culture over ian To address the situation, Blake should take corrective measures. Initially, he needs to inform the board of directors about the cost reallocation and ensure transparency in evaluating divisional performance. Next, implementing a fair and consistent cost allocation method is essential, relying on logical bases such as usage or revenue contribution. Additionally, he needs to reassess the actual performance of the plumbing division using suitable metrics such as contribution margin while considering its broader value to the company. Furthermore, Blake must carefully weigh the potential human impact if deciding to close this division, which could result in 500 long-standing employees Losing their jobs and balance financial decisions with ethical leadership and social responsibility considerations. Maintaining integrity and transparency is crucial for rebuilding trust and making informed decisions that benefit both the company and its stakeholders (Kimmel et al., 2021). St=1i=] 02) eC: Kimmel, P. D., Weygandt, J. J., & Mitchell, J. E. (2021). Accounting: Tools for business decision making (8th ed.). Wiley