Assume you are the production cost accountant at Kwan. The plant manager, who is also your boss, asked you to change the computation of the production-volume variance from being unfavorable variance to a favorable variance. Doing that would be reflected in the income statement also as favorable, for your boss and even for yourself. You run the numbers and notice that the change he is asking you to do is only a 1% difference in the overall financial statements. What would you do? Would you go ahead with bending the numbers, explain your decision.

back ground

Kwan Manufacturing Co. (Variable & Absorption Costing)

Kwan Manufacturing Company data for 20X0 follow:

Sales: 11,000 units at $19 each
Actual production	15,500 units
Expected volume of production	15,500 units
Manufacturing costs incurred
Variable	$124,000
Fixed	54,000
Nonmanufacturing costs incurred
Variable	$ 11,000
Fixed	17,800