172 I 100% + Background: Marcus, the cost accountant for Hi-Power Mower Company, recently installed activity-based costing at Hi-Power's St. Louis lawn tractor (riding mower) plant where three models, - the 8- horsepower Bladerunner, the 12-horsepower Quickcut, and the 18-horsepwoer Supercut - are manufactured. Marcus's new product costs for those three models show that the company's traditional costing system had been significantly under-costing the 18-horsepower Supercut. This was due primarily to the lower sales volume of the Supercut compared to the Bladerunner and the Quickcut. Before completing his analysis and reporting these results to upper-management, Marcus is approached by his friend Ray, who is the production manager for the 18-horsepower Supercut model. Ray has heard from one of Marcus's staff about the new product costs and is upset and worried about his job because the new costs show Supercut to be losing, rather than making, money. At First Ray condemns the new cost system, whereupon Marcus explains the practice of activity- based costing and why it is more accurate than the company's present system. Even more worried now, Ray begs Marcus, "Massage the figures just enough to save the line from being discontinued. You don't want me to lose my job, do you? Anyway, nobody will know." Marcus holds firm but considers recalculating all his calculations before submitting his costs to management. Should he calculate for accuracy or help his friend out? Instructions: You are going to submit 2 deliverables based on the following 2 requirements: 1. Prepare a written response organizing your thoughts which will help make your decision for this ethical dilemma. Be sure to include ALL the following: Discuss the significance of ethics in managerial accounting. o Why is it important? Structure your response in terms of the principles (not the standards) that managerial accountants agree to uphold as stated in the IMA Statement of Ethical Professional Practice (Chapter 1: refer to textbook section 1.2 on page 13). Be sure to include all 4 principles. Who are the stakeholders that are affected by Marcus's actions? o Be specific and indicate how they are impacted (positively or negatively) and why. What are Marcus's ethical obligations to the company? To his friend? Using the IMA Statement of Ethical Professional Practice, identify the standards that Marcus would violate should he go along with Ray's request. o Be specific and explain why the standard would be violated. How could Marcus help his friend yet still uphold his ethical obligations? o Decide how Marcus should proceed. 2. Write a professional memo to upper management from your own perspective as Marcus, the cost accountant. Explain your costing results and propose your ideas on how to move forward based on your costing results. Deliverables to upload: via Microsoft Word (1) Written response to me organizing your thoughts from requirement #1. (2) a formal, professional memo to upper management based on your cost results and decisions. Google "professional memo" and be sure to follow business-like guidelines (single-spacing is used in business, double-spacing is ONLY academic)