Professional ethics, quality control (CMA). Fullrange Inc. produces complex printed circuits for stereo amplifiers. The circuits are sold primarily to major component manufacturers, and anv production overruns are sold to small manufacturers. The small manufacturer market segment appears very profitable even though the sales to that segment are made at a substantial discount.

A common product defect that occurs in production is "component failure" caused by precise heat levels not being maintained during the production process. Every printed circuit undergoes testing. Rejects from the testing program can be reworked to acceptable levels if the defect is a component failure. However, in a recent analysis of customer complaints. *.

Wilson (the cost accountant) and Sarah Young (the quality control engineer) have ascertained that normal rework does not bring the circuits up to specification. Sampling shows that about one-half of the reworked circuits will fail after extended high-volume amplifier operation. The incidence of failure in the reworked circuits is projected to be about lO^r during one to I -

years' operation. Unfortunately, there is no way to determine which reworked ci cuits will fail ecause testing will not detect this problem. The rework process could be cha ,ed to correct the problem, but the cost-benefit analysis for the suggested change in the re k process indicates that it is not feasible. Fullrange 's marketing analyst has indicated that tl s problem will havt a significant impact on the company's reputation and customer satis! ction if it is no! Consequently, the board ectors would interpret this probler as having serious negative implications on the comp - profitability. Wilson has include ie circuit failure and rework proble in his report t .at has be*

prepared for the upcomin jarterly meeting of the board of directors. Due to u p< entiala<

verse economic impact, V son has followed a long->tandi lg p tia high] it: g this -

formation.

id indicated to the controller that he should control his people better. "We can't upset the joard with this kind of material. Tell Wilson to tone that down. Maybe we can get it by this meeting and have some time to work on it. People who buy those cheap systems and play them that loud shouldn't expect them to last forever."
The controller called Wilson into his office and said, "George, you'll have to bury this one. The probable failure of reworks can be referred to briefly in the oral presentation, but it should not be mentioned or highlighted in the advance material mailed to the board." Wilson feels strongly that the board will be misinformed on a potentially serious loss of income if he follows the controller's orders. Wilson discusses the problem with the quality control engineer, who simply remarks, "That's your problem, George."
Required 1. Discuss the ethical considerations that George Wilson should recognize in deciding how to proceed in this matter.
2. Explain what ethical responsibilities should be accepted in this situation by the

(a) controller,

(b) quality control engineer, and

(c) plant manager and staff.
3. What should George Wilson do in this situation? Explain your answer.