Detwiler, Inc. is the manufacturer of miniature models, especially of automobiles with historical interest. The company is developing new standard costs. Jerry Hancock suggests that the new standards for materials should not include any waste for liquid plastics that spill out of the molds. "After all," he says, "we're trying to be a world class company. When we build in waste, we tell the workers it's okay to waste some." Nancy Kirkham, another manager, disagrees. "If we don't allow for some normal human error," she says, "we'll have a mighty unhappy work force. Also, I think that these kinds of perfection standards exploit the workers. I certainly wouldn't want to be held up to perfection every daywhat could I do but fail?"

The argument continued. Finally, the standards were prepared. All standards were prepared according to normal expected performance, except that for materials, an ideal standard was used. Nancy, still maintaining the unfairness of the system, refused to hold her workers accountable for materials quantity variances.

Required:

1. Are ideal standards unethical and how the ideal standards should be used? Explain briefly. (16marks)

2. Is it unethical for Nancy to refuse to support the standards? Explain. (10marks)