The machinery-building factory (MBF) of Packages, Ltd., makes machines that are used in packaging products such as toothpaste. These machines are sold by Packages’ regional office as a complete solution: that is, the regional office will not only sell the containers but also the equipment required to fill the product. MBF transfers its machines to the regional packaging units at full cost (i.e., materials plus labor plus allocated overhead).
MBF recently branched out to sell foil printing machines in the open market. This expansion required it to purchase new computer-controlled lathes and milling machines. These machines require minimal labor input once they are set up. (The current manual lathes and milling machines could not provide the required quality. These machines have a man–machine ratio of 1, meaning that each machine hour requires one labor hour.)
During the past year, the market for foil printing machines has experienced some unanticipated shrinkage, imposing considerable price pressure on the existing suppliers (including MBF). The division is in danger of not meeting its profit goals for the third quarter in a row.
MBF’s division manager comes to you, the division’s controller, with a novel solution to her problem. She wishes you to modify the division’s cost accounting system to a single pool system and use labor hours as the sole allocation basis.

Required:
a. How does the manager’s proposal help solve her problem? Notice that the proposal neither brings in additional revenue nor reduces costs.
b. What should you do? Be sure to consider the IMA’s ethical guidelines in your answer.