Fall 2017 - Managerial Accounting Case Apex Art has been requested to prepare a bid on 500 pieces of framed artwork for a new hotel. Winning the bid would be a big boost for sales representative Jason Grant, who works entirely on commission. Sonja Gomes, the cost accountant for Apex, prepared the bid and calculated full product Costs of $121,000. Based on the company policy of pricing at 125% of full cost, Gomes gives Grant a figure of $151,200 to submit for the job Grant is very concerned. He tells Gomes that at that price, Apex has no chance of winning the job. He confides that he spent $500 of company funds to take the hotel's purchasing agent to a basketball playoff game where the purchasing agent disclosed that a bid of $145,000 would win the job. He hadn't planned to tell Gomes because he was confident that the bid she developed would be below that amount. Gomes reasons that the $500 he spent will be wasted if Apex doesn't capitalize on this valuable information. In any case, the company will still make money if it wins the bid at $145,000 because it is higher than the full cost of $121,000 Gomes suggests that if Grant is willing to use cheaper materials for the frame, he can achieve a bid of S145,000. The artwork has already been selected and cannot be changed, so the entire amount of the reduction in cost will need to come from framing materials BRIEFLY answer the following five questions 1) State and describe the issues, if any, which may potentially violate ethical principles 2) a. Whose interests could be jeopardized due to the potential unethical behavior that you identified in 1)? b. Provide reasons why these stakeholders' interests can be jeopardized 3) a. What is Gomes' rationale after Grant confides in her? b. Discuss the alternative courses of action that Gomes can take and the possible 4) What should Gomes do, and why? Elaborate 5) a. What can you conclude if Grant were to take Gomes' suggestions, and what could be the consequences? b. What could be the possible consequences for taking the suggestion that you A note regarding the bidding process: The hotel would announce that it is seeking bids from suppliers interested in providing the artwork. The hotel would specify their requirements and a deadline for submitting bids. All interested companies, such as Apex Art, would submit bids in sealed envelopes. After the deadline has passed, the hotel company would unseal the bids and, assuming that at least one supplier submitted a bid within their maximum price (this is the info that Grant obtained from the purchasing agent which is not normally known to the bidders) would award the job Generally, but not necessarily, the job is awarded to the company with the lowest bid