13-44 Budget Revisions: Ethical Issues

Elizabeth Jablonski is the director of Research and Development for Galaxy Electronics. Last week, she submitted the following funding request as part of the annual budget process:

Project	Funding Request
1. Portable audio project	$2,500,000
2. Aircraft guidance system	$1,800,000
3. Automobile navigation system	$3,000,000
4. Miniature DVD player	$1,200,000
Total request	$8,500,000

The aircraft guidance system is a project the company has publicly announced and is marketing strongly to manufacturers. The miniature DVD project has received little support in the company but is one of Elizabeth's favorites. The chief financial officer requests all groups to revise their budgets because of lower than expected sales for the company. Department heads have been asked to submit new budgets that are 10% below their original submissions.

Knowing the company's commitment to the aircraft guidance system, Elizabeth submits the following revision noting that it is 10% lower as requested.

Project	Revised Funding Request
1. Portable audio project	$2,450,000
2. Aircraft guidance system	$1,000,000
3. Automobile navigation system	$3,000,000
4. Miniature DVD player	$1,200,000
Total request	$7,650,000

Required

What do you think Elizabeth is trying to accomplish with the revised request, and is it ethical? Is Elizabeth likely to be successful in achieving the goal you identified?