Initial Reply Due: Wednesday October 27 @ 11:59pm - Two Replies to Peers Due: Monday November 1 @ 11:59pm Purpose This discussion explores an ethical dilemma regarding how a company records job costs for its customers. Instructions (Problem TIF 20-1 Warren, Reeve & Duchac 14E) The Southern Division manager of Texcaliber Inc. is growing concerned that the division will not be able to meet its current period income objectives. The division uses absorption costing for internal profit reporting and had an appropriate level of inventory at the beginning of the period. The division manager knows that he can boost profits by increasing production at the end of the period. The increased production will allocate fixed costs over a greater number of units, reducing cost of goods sold and increasing earnings. Unfortunately, it is unlikely that additional production will be sold, resulting in a large ending inventory balance. The division manager has come to Aston Melon, the divisional controller, to determine exactly how much additional production is needed to increase net income enough to meet the division's profit objectives, Aston analyzes the data and determines that the division will need to increase inventory by 30% in order to absorb enough fixed costs to meet the division's income objective. Aston reports this information to the division manager Pick one of the two following questions to discuss in your post. 1. Is Aston behaving ethically? Why or why not? 2. Is the Division Manager behaving ethically? Why or why not? Write a paragraph explaining your answer. A paragraph is at least four sentences. Please use correct grammar and full sentences. Please do not copy and paste sentences directly from the textbook (use your own words). Initial Reply Due: Wednesday October 27 @ 11:59pm - Two Replies to Peers Due: Monday November 1 @ 11:59pm Purpose This discussion explores an ethical dilemma regarding how a company records job costs for its customers. Instructions (Problem TIF 20-1 Warren, Reeve & Duchac 14E) The Southern Division manager of Texcaliber Inc. is growing concerned that the division will not be able to meet its current period income objectives. The division uses absorption costing for internal profit reporting and had an appropriate level of inventory at the beginning of the period. The division manager knows that he can boost profits by increasing production at the end of the period. The increased production will allocate fixed costs over a greater number of units, reducing cost of goods sold and increasing earnings. Unfortunately, it is unlikely that additional production will be sold, resulting in a large ending inventory balance. The division manager has come to Aston Melon, the divisional controller, to determine exactly how much additional production is needed to increase net income enough to meet the division's profit objectives, Aston analyzes the data and determines that the division will need to increase inventory by 30% in order to absorb enough fixed costs to meet the division's income objective. Aston reports this information to the division manager Pick one of the two following questions to discuss in your post. 1. Is Aston behaving ethically? Why or why not? 2. Is the Division Manager behaving ethically? Why or why not? Write a paragraph explaining your answer. A paragraph is at least four sentences. Please use correct grammar and full sentences. Please do not copy and paste sentences directly from the textbook (use your own words)
