Managerial Accounting Ethics Situation
You sell very expensive bicycles to independently owned cycling retailers
around the country. You need to sell 50 more bicycles at $1,000 each to hit goal
for the year and earn yourself a $5,000 year end bonus. If you do not make the
goal, you do not get any of the bonus.
It is 11:45pm on the last day of the year. You’ve tried calling every customer
you can think of, you’ve made plenty of special deals, and can’t make any more.
Too many customers are worried about slow sales coming in the fall and winter
months. They are not all that financially stable. You have just enough time in
the day to enter orders for one $1,000 bike each for your top 50 customers and
ship them without their permission. Your boss thinks this is a good idea
(apparently she gets a bonus too?).
Two obvious courses of action:
1)
2)
TWO more creative courses of action:
3)
4)
Assess the outcomes to the people affected by your decision according to the
following decision making criteria. Be sure to consider both short-term and
long-term consequences. Make your notes under each action listed above.
Fairness: Is the action fair to the parties involved?
Objectivity: Does the action optimize the total utility outcome across all parties?
Honesty: Are the rights of involved parties respected?
Responsibility: Does your action show that you care about the various
stakeholders?
Managerial Accounting Ethics Situation
You are in charge of a major profitability analysis project in a large firm where
you work. You have correctly determined that the profitability of the company
will be much stronger if one particular division is eliminated. The Vice President
of this division is your friend, and you are hopeful that this relationship may
someday lead to you being promoted to a V.P. position too. The company has no
further use for your friend if her division is eliminated. You fully expect that she
will be let go, and you know she has no other job prospects to help support her
family.
She shared with you some ways that you could fudge your analysis to make it
look like her division should not be eliminated. She asks that you make these
changes to your analysis before making your final presentation to your CEO.
Two obvious courses of action:
1)
2)
TWO more creative courses of action:
3)
4)
Assess the outcomes to the people affected by your decision according to the
following decision making criteria. Be sure to consider both short-term and
long-term consequences. Make your notes under each action listed above.
Fairness: Is the action fair to the parties involved?
Objectivity: Does the action optimize the total utility outcome across all parties?
Honesty: Are the rights of involved parties respected?
Responsibility: Does your action show that you care about the various
stakeholders?
Managerial Accounting Ethics Situation
You are the production manager of a medium sized telescope manufacturer.
Your performance bonus is based on an efficiency rating where you earn a lot
more bonus pay for producing more telescopes, whether they are needed for sales
or not. This high-volume production strategy spreads the fixed factory rent and
other costs over more telescopes, thereby reducing the production costs of each
individual telescope unit.
You are done producing all of the telescopes that are needed for the year, and
you have the ideal inventory level to start next year. You are still short of your
performance targets though. As of now you will not receive your bonus. There
is still time to order some more raw materials and produce an amount large
enough to earn your bonus. There is a new design to replace your current model
telescopes, but the raw materials for those will not be available until the next
fiscal year, which is too late to produce them to help meet your efficiency targets.
Two obvious courses of action:
1)
2)
TWO more creative courses of action:
3)
4)
Assess the outcomes to the people affected by your decision according to the
following decision making criteria. Be sure to consider both short-term and
long-term consequences. Make your notes under each action listed above.
Fairness: Is the action fair to the parties involved?
Objectivity: Does the action optimize the total utility outcome across all parties?
Honesty: Are the rights of involved parties respected?
Responsibility: Does your action show that you care about the various
stakeholders?
Managerial Accounting Ethics Situation
You are the close friend of the Vice President of the surfboard division in the
company where you are an internal auditor. The surfboard division regularly
shows much higher profitability than the diving board division. You discover
that the costs for the extensive design and testing as well as the litigation costs of
selling surfboards are being split evenly between the surfboard and diving-board
divisions.
In reality, the more complex surfboards cause almost all of those costs and the
simple never-changing diving boards are much cheaper to make and market than
the rest of the company thinks. The surfboards are really losing money for the
company, and the diving boards are really the profitable product! You share
your findings with your friend. He casually offers you free use of his weekend
retreat cabin and ski lift passes for as long as this issue goes unnoticed to top
management.
Two obvious courses of action:
1)
2)
TWO more creative courses of action:
3)
4)
Assess the outcomes to the people affected by your decision according to the
following decision making criteria. Be sure to consider both short-term and
long-term consequences. Make your notes under each action listed above.
Fairness: Is the action fair to the parties involved?
Objectivity: Does the action optimize the total utility outcome across all parties?
Honesty: Are the rights of involved parties respected?
Responsibility: Does your action show that you care about the various
stakeholders?
Managerial Accounting Ethics Situation
You are in charge of the budgeting process at a large firm. You realize that you
do not have the skills necessary to perform the job well. You are, however, very
good at shifting blame to the many other people involved in the process. You are
the boss’s friend, and she trusts your assessment that it is the other people who
are performing poorly. Over the two years you’ve had this job responsibility,
your performance has led to the dismissal of several other employees who have
taken the fall for you.
Two obvious courses of action:
1)
2)
TWO more creative courses of action:
3)
4)
Assess the outcomes to the people affected by your decision according to the
following decision making criteria. Be sure to consider both short-term and
long-term consequences. Make your notes under each action listed above.
Fairness: Is the action fair to the parties involved?
Objectivity: Does the action optimize the total utility outcome across all parties?
Honesty: Are the rights of involved parties respected?
Responsibility: Does your action show that you care about the various
stakeholders?