Diane Barone was a good friend of yours in high school and is from your home town.

While you chose to major in accounting when you both went away to college, she majored in marketing and management. You have recently been promoted to accounting manager for the Snack Foods Division of Melton Enterprises, and your friend was promoted to regional sales manager for the same division of Melton. Diane recently telephoned you. She explained that she was familiar with job cost sheets, which had been used by the Special Projects division where she had formerly worked. She was, however, very uncomfortable with the production cost reports prepared by your division. She emailed you a list of her particular questions:

1. Since Melton occasionally prepares snack foods for special orders in the Snack Foods Division, why don’t we track costs of the orders separately?

2. What is an equivalent unit?

3. Why am I getting four production cost reports? Isn’t there one Work in Process account?

Instructions Prepare a memo to Diane. Answer her questions, and include any additional information you think would be helpful. You may write informally, but do use proper grammar and punctuation.

ETHICS CASE