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Discussion Questions: Post your initial tesponses to the divcussion fenim by Wednesday 11:59 perh, and respond to the dincusion of others by Saturday 1159p.m. - Discassion Question f20 poinitr) o Prompt ETHICS CHALLENGE Gary Sievens and Mary James are production managers int the Cocsomet Flectronics Division of General Elcetronics Comparyy, which has several dosen plants scanersd in locations througheot the world Mary manages the plant localed in Des Mornes, lowa, while Gary manages the plant in EI Soguribo, California. Production managers are prod a satary and get an adfitional bonus: equal to 5% of their hase salary if the entire divisipa meets ee cuceods its target profits for the year. The homus is determined in March afier the coempoay's afmual report has been prepared and isued to socibolders. Shortly after the beginning of the new year, Mary received a phone call from Gary that went like this: Gary: How's it going. Mary? Maryz Fine, Gary, How's it going with you? Gary: Great! I just got the preliminary profit figures for the division for lastyear. and we are within 5200,000 of making the year's target profits. All we have to do is poll a few strings, and we'll be over the top'? Mary: What do you mean? Gary: Well, one thing that would be casy to change is your eatimate of the percentage completion of your ending work in process inventorics. Mary: I don't know if I can do that, Gary Those percentage completion figures: are supplied by Tom Withrop, my lead supervisor, wbol have always crasted to provide us with good estimates. Besides, I have already sent the percentage completion rigures to corpotate beadquarters. Gary: You can always tell them there was a mistake. Think abour it. Mary. Nll of us managers are doing as much as we can to poll this bonus out of the but You may not want the bonus check, but the rest of u sute coald use at. The finsl processing deparment in Mary's productios facthry began the year with bo wock in process investory. Daring the year, 210.000 unis were transferred in from the prior processing department and 200,000 units were corrpieted and sold Costs transferred in from the prior department total 539375,000 . Vo materiah are added in the final processing departmeat. A total of 52007500 of conversing coss was incurred in the final processing deptrtment this year. Because there are no beginning invertories, it makes no dafferesse whether the weighted-average or FFO method is used by the corpuay. Yce may choose to specify that the FIFO method be uked rather than the weighited-average method. - Requirements: Provide anwwers to the questions. 1. Tom Winthep estimated that the anits in ending work is ptosess invertory in the final procesing department were 30 ; complese wh th respect to the conversion costs of the final procesting departmens. If this estimate of the percentage completion is uled, what wodid be the cost of goods sold for the year? 2. Does Gary Sievens want the estimated pereentage to be increated of decreased? Explain why. 3. What percentage completion woold tesult in increaitg zeporned oet operating incosne by $200,000 over the net operating income thar would be reported if the 30% figure were used? 4. Do you think Mary James should po aloeg with the recivest to aliter estimates of the percentage conppietion? Why of why poc ? Discussion Questions: Post your initial tesponses to the divcussion fenim by Wednesday 11:59 perh, and respond to the dincusion of others by Saturday 1159p.m. - Discassion Question f20 poinitr) o Prompt ETHICS CHALLENGE Gary Sievens and Mary James are production managers int the Cocsomet Flectronics Division of General Elcetronics Comparyy, which has several dosen plants scanersd in locations througheot the world Mary manages the plant localed in Des Mornes, lowa, while Gary manages the plant in EI Soguribo, California. Production managers are prod a satary and get an adfitional bonus: equal to 5% of their hase salary if the entire divisipa meets ee cuceods its target profits for the year. The homus is determined in March afier the coempoay's afmual report has been prepared and isued to socibolders. Shortly after the beginning of the new year, Mary received a phone call from Gary that went like this: Gary: How's it going. Mary? Maryz Fine, Gary, How's it going with you? Gary: Great! I just got the preliminary profit figures for the division for lastyear. and we are within 5200,000 of making the year's target profits. All we have to do is poll a few strings, and we'll be over the top'? Mary: What do you mean? Gary: Well, one thing that would be casy to change is your eatimate of the percentage completion of your ending work in process inventorics. Mary: I don't know if I can do that, Gary Those percentage completion figures: are supplied by Tom Withrop, my lead supervisor, wbol have always crasted to provide us with good estimates. Besides, I have already sent the percentage completion rigures to corpotate beadquarters. Gary: You can always tell them there was a mistake. Think abour it. Mary. Nll of us managers are doing as much as we can to poll this bonus out of the but You may not want the bonus check, but the rest of u sute coald use at. The finsl processing deparment in Mary's productios facthry began the year with bo wock in process investory. Daring the year, 210.000 unis were transferred in from the prior processing department and 200,000 units were corrpieted and sold Costs transferred in from the prior department total 539375,000 . Vo materiah are added in the final processing departmeat. A total of 52007500 of conversing coss was incurred in the final processing deptrtment this year. Because there are no beginning invertories, it makes no dafferesse whether the weighted-average or FFO method is used by the corpuay. Yce may choose to specify that the FIFO method be uked rather than the weighited-average method. - Requirements: Provide anwwers to the questions. 1. Tom Winthep estimated that the anits in ending work is ptosess invertory in the final procesing department were 30 ; complese wh th respect to the conversion costs of the final procesting departmens. If this estimate of the percentage completion is uled, what wodid be the cost of goods sold for the year? 2. Does Gary Sievens want the estimated pereentage to be increated of decreased? Explain why. 3. What percentage completion woold tesult in increaitg zeporned oet operating incosne by $200,000 over the net operating income thar would be reported if the 30% figure were used? 4. Do you think Mary James should po aloeg with the recivest to aliter estimates of the percentage conppietion? Why of why poc