Question
Do you think Misappropriation of assets and fraudulent financial reporting can be an ethical issue in the case below? If yes, how so? Versan Dixon
Do you think Misappropriation of assets and fraudulent financial reporting can be an ethical issue in the case below? If yes, how so?
Versan Dixon is the supervisor of the Artwell Division of Cygnet Limited. Her annual bonus is based on the success of new products and is computed on the number of sales that exceed each new product's projected breakeven point. In reviewing the computations supporting her most recent bonus, Ms. Dixon found that although an order for 7,500 units of a new product called Rosolon had been refused by a customer and returned to the company, the order had been included in the calculations. She later discovered that the company's accountant had labeled the return an overhead expense and had charged the entire cost of the returned order to the plantwide Manufacturing Overhead account. The result was that Rosolon appeared to exceed breakeven by more than 5,000 units and Ms. Dixon's bonus from this product amounted to over $800.
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