Ch 4 - EYK4-1 - p. 163-164

EYK4-1. Ethics Case Sweet Fragrances Company uses process costing to account for the manufacture of its perfume. The factory consists of three departments: Blending, Bottling, and Packaging.

The production manager of the Bottling department, Janine Post, has recommended that her department not be charged for new labels that are more elaborate and expensive than those used in previous years. The new labels were designed as a tie-in for the marketing and advertising campaigns. Post recommends that the costs of the labels be charged to advertising expense. This would result in slightly lower product costs charged to the bottling department than last year.

The company has instituted a bonus plan for all managers based on keeping costs within a range of previous years costs.

Sam Block, the accounting manager, reviews all recommendations by managers before they are presented to top management.

Required

What ethical considerations may arise from Janine Posts recommendation? What alternative recommendations might be made?