16-63. Ethics and Standard Costs

Farmer Franks produces items from local farm products and distributes them to supermarkets. Over the years, price competition has become increasingly important, so Susan Kramer, the companys controller, is planning to implement a standard cost system for Farmer Franks. She asked her cost accountant, Margaret Chang, to gather cost information on the production of blueberry preserves (Farmer Franks most popular product). Margaret reported that blueberries cost $0.75 per quart, the price she intends to pay to her good friend who has been operating a blueberry farm that has been unprofitable for the last few years. Because of an oversupply in the market, the price for blueberries has dropped to $0.60 per quart. Margaret is sure that the $0.75 price will be enough to pull her friends farm out of the red and into the black.

Required

Is Margarets behavior regarding the cost information she provided to Susan unethical? Explain your answer.