Jay Farrar Company is a manufacturing company that specializes in writing instruments. past year was a difficult one for the company, as it sought to retain its share in a market in which the largest competitors were also rapid innovators. Farrar introduced a new product late in the year, even though testing was not complete. It was a pen designed with two cartridgesone supplying ink and the other correction fluid. A person could then switch easily between writing and correcting errors. It was priced fairly high, and was never heavily advertised. Even sothe Correct- as the product was named, was an overwhelming success. The success of the product has Ritter, the manager of the New Products division worried, however. He was concerned that quality problems would begin occurring, since the longevity of the pen and stability of the correction fluid formulation had not been testedHe did not want sales personnel to get the bonuses that appeared to be indicated, since they might aggressively promote a product that would fall in use. He preferred to complete testing of the pen first, so that more confidence could be placed in the results. Top management however, declined the tests. Ritter then instructed youthe accountantto prorate payroll taxes or rent expense for the rest of the year, but to show them as current expenses in total. In this way, the new product would appear to be only slightly profitable. To receive full credit answer both:

Describe the alternatives that you as an accountant would have in this situation

Indicate which alternative best.