4. Suppose that Christopher Jon's final analysis shows that purchasing slit steel directly from BeeSteel is Serene's least costly option. Before making his decision, Jon receives a call from a good friend who is the production manager at Cut Solutions. His friend has called to urge Jon to use Cut Solutions' services. His friend insisted: "We're really hurting here at Cut Solutions, Chris. If we don't get this job, it's going to be a rough month for some of us." Discuss Christopher Jon's ethical obligations in this matter.(Hint: apply the Code of Ethics for Professional Accountants)

Assignment Questions Below is a conversation between Christopher Jon, a purchasing manager for Serene Son Bhd and Martin Lew, a purchasing assistant for the same company: Christopher : It's nice to have supply options, but I'm going bananas trying to sort out these slit steel bids. Martin : I see what you mean. Let me call my friend over in the accounting office. He'll have some suggestions for us. Serene Son Bhd needs a total of 125 tonnes of sheet steel: 50 tonnes of 4 centimetres width and 75 tonnes of 8 centimetres width for a customer's order. Serene can purchase the sheet steel in these widths directly from BeeSteel Son Bhd, a steel manufacturer, or it can purchase sheet steel from BeeSteel that is 48 centimetres wide and then have it slit into the desired widths by Cut Solutions Sdn Bhd. Both vendors are local and have previously supplied materials to Serene. Cut Solutions specialises in slitting sheet steel, provided by a customer, into any desired width. When negotiating a contract, Cut Solutions tells its customers that there is a scrap loss in the slitting operation, but that this loss has never exceeded 2.5 per cent of input tonnes. Cut Solutions recommends that if a customer has a specific tonnage requirement, it should supply an adequate amount of steel to yield the desired quantity. Cut Solutions' charges for steel slitting are based on good output, not input handled. The 48 centimetre-wide sheet steel is a regular stock item of BeeSteel and can be shipped to Cut Solutions within five days of receipt of Serene's purchase order. If BeeSteel is to do the slitting, shipment to Serene would be scheduled for 15 days from receipt of the order. Cut Solutions has quoted delivery at 10 days after receipt of the sheet steel. In prior dealings, Serene has found both BeeSteel and Cut Solutions to be reliable vendors with high-quality products. Serene has received the following price quotations from BeeSteel and Cut Solutions: BeeSteel Sdn Bhd rates Size Quantity Cost per tonne 4 cm 50 tonnes RM 210.00 8 cm 75 tonnes RM 200.00 48 cm 125 tonnes RM 180.00 Cut Solutions Son Bhd steel slitting rates Size Quantity Cost per tonne 4 cm 50 tonnes RM 18.00 8 cm 75 tonnes RM 15.00 Freight and handling charges Destination Cost per tonne BeeSteel to Serene RM 10.00 BeeSteel to Cut Solutions RM 5.00 Cut Solutions to Serene RM 7.50 In addition to the above information, Cut Solutions has informed Serene that if Serene purchases 100 output tonnes of each width, the per-tonne slitting rates would be reduced by 12 per cent. Serene knows that the same customer will be placing a new order in the near future for the same material and estimates it would have to store the additional tonnage for an average of two months at a carrying cost of RM1.50 per month for each tonne. There would be no change in BeeSteel's prices for additional tonnes delivered to Cut Solutions. As Martin's friend in the accounting office, you have just received a phone call for help. Required: 4. Suppose that Christopher Jon's final analysis shows that purchasing slit steel directly from BeeSteel is Serene's least costly option. Before making his decision, Jon receives a call from a good friend who is the production manager at Cut Solutions. His friend has called to urge Jon to use Cut Solutions' services. His friend insisted: "We're really hurting here at Cut Solutions, Chris. If we don't get this job, it's going to be a rough month for some of us." Discuss Christopher Jon's ethical obligations in this matter. (Hint: apply the Code of Ethics for Professional Accountants)