This was Joel Craig's first visit to the controller's corner office since being recruited for the senior
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S & G Fasteners was a new company, specializing in plastic industrial fasteners. All products carry a generous long-term warranty against manufacturer's defects. “Don't you think 4% of sales is a little high for our warranty expense estimate?” his boss wondered. “After all, we're new at this. We have little experience with product introductions. I just got off the phone with Blanchard (the company president). He thinks we'll have trouble renewing our credit line with the profits we're projecting. The pressure's on.”
Required:
1. Should Craig follow his boss's suggestion?
2. Does revising the warranty estimate pose an ethical dilemma?
3. Who would be affected if the suggestion is followed?
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Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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