Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company A sells networking equipment to large corporations and federal, state, and local governments. Corporate sales are the result of a competitive bidding process, where

image text in transcribed
Company A sells networking equipment to large corporations and federal, state, and local governments. Corporate sales are the result of a competitive bidding process, where Company A competes against other companies based on selling price. Sales to the government, however, are determined on a cost plus basis, where the selling price is determined by adding a fixed markup percentage to the total job cost. James Lopez is the cost accountant for the Electronics Division of Company A. The division is under pressure from senior management to improve income from operations. As james reviewed the division's job cost sheets, he realized that he could increase the division's income from operations by moving a portion of the direct labor hours that had been assigned to the job order cost sheets of corporate customers onto the job order costs sheets of government customers. He believed that this would create a "win-win" for the division by (1) reducing the cost of corporate jobs, and (2) increasing the cost of government jobs whose profit is based on a percentage of job cost. James submitted this idea to his division manager, who was impressed by his creative solution for improving the division's profitability Instructions Answer the question below using 150 words or more. After this, make sure to reply to one of your peer's responses using 100 words or more. Is James' plan ethical? Company A sells networking equipment to large corporations and federal, state, and local governments. Corporate sales are the result of a competitive bidding process, where Company A competes against other companies based on selling price. Sales to the government, however, are determined on a cost plus basis, where the selling price is determined by adding a fixed markup percentage to the total job cost. James Lopez is the cost accountant for the Electronics Division of Company A. The division is under pressure from senior management to improve income from operations. As james reviewed the division's job cost sheets, he realized that he could increase the division's income from operations by moving a portion of the direct labor hours that had been assigned to the job order cost sheets of corporate customers onto the job order costs sheets of government customers. He believed that this would create a "win-win" for the division by (1) reducing the cost of corporate jobs, and (2) increasing the cost of government jobs whose profit is based on a percentage of job cost. James submitted this idea to his division manager, who was impressed by his creative solution for improving the division's profitability Instructions Answer the question below using 150 words or more. After this, make sure to reply to one of your peer's responses using 100 words or more. Is James' plan ethical

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ronald W Hilton

7th Edition

0073022853, 978-0073022857

More Books

Students also viewed these Accounting questions

Question

What is Accounting?

Answered: 1 week ago

Question

Define organisation chart

Answered: 1 week ago

Question

What are the advantages of planning ?

Answered: 1 week ago