Budgeting - Ethics Case Ethics - Do I have to tell my Manager? Lugo Pryo is a sales representative at Rutherford, Inc. Lugo has a reputation of always being able to exceed the sales goal set by his manager, and exceeding the sales goal results in a yearend bonus. Lugo has just received a verbal commitment from a customer for a large order to be processed in the New Year. Rutherford has not received a purchase order from the customer, but when it arrives, it will increase Lugo's sales by approximately 10% for the year. Lugo has also received the proposed budget for the New Year from his manger. Because the purchase order has not been processed, the proposed budget does not include the new order. Lugo smiles. If he can get the budget approved before the purchase order is processed, he will certainly exceed his sales goals for the next year and earn a sizeable yearend bonus. Should Lugo tell his manager about the order? What would you do? Ethics (2) - Do we have to talk about all of those variances? Reese knew he had made a mistake, but he didn't realize how big his makes was, Reese was looking over the production reports for the past quarter. He had authorized a purchase of materials that seemed like a good deal - the cost was 40% less than the amount charged by the regular vendor - but the materials had been low quality. There had been a lot of wast. The reports showed a significant unfavorable direct materials cost variance, but it was offset by the just-as-significant favorable direct material cost variance. Reese had learned a valuable lesson He would take more time to check out new vendors and not make the same mistake again. The current problem however, was the reports. Reese was scheduled to meet with his manager. He decided the best course of action would be to not discuss the cost and efficiency variances for direct materials, but just focus on the total variance. Reese knew his manager was busy and may never read the detailed reports and find out about the mistake if he didn't bring it to his manager's attention. Should Reese report the cost and efficiency variance? What would you do