Consider the following conversation between Mary, a self-employed printer, and Peter, an assistant in the athletics and
Question:
Consider the following conversation between Mary, a self-employed printer, and Peter, an assistant in the athletics and recreation department of a local university.
Peter: Mary, we have been customers of yours for several years and we currently need 10,000 posters for the upcoming basketball season. Here is the mock-up and we will need them in one month. What price can you give us?
Mary: Based on my costs for card stock and supplies, I think I can do them for about $5,000 and have them to you in the required timeframe. I think this is the best price you are going to get anywhere.
Peter: We have always been satisfied with your work and reliability. I like your price, but I have a better idea. Send me an invoice for $7,500, which is our budget for this job and when it is paid, give me back $2,000, preferably in cash. I'll make sure you get the job and we will continue our relationship.
Required:
Would it be ethical for Mary to go along with what Peter is proposing? What should she do?
Step by Step Answer:
Cornerstones of Managerial Accounting
ISBN: 978-0176721237
3rd Canadian edition
Authors: Maryanne Mowen, Don Hanson, Dan Heitger, David McConomy, Bradley Witt, Jeffrey Pittman