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Joyce Sanders, the cost accountant for Lakeland Drone Manufacturing Company, recently installed activity - based costing 1 at the firm s Southern plant where three
Joyce Sanders, the cost accountant for Lakeland Drone Manufacturing Company, recently installed activitybased costing at the firms Southern plant where three models, the Tricopter, the Hexacopter, and the Coaxial are manufactured. Joyces new product costs for those three models show that the companys traditional costing system had been significantly under costing the Coaxial model. This was due primarily to the lower sales volume of the Coaxial compared to the Hexacopter and the Tricopter. Before completing her analysis and reporting these results to management, Joyce is approached by her friend Stanley Toler, who is the production manager for the Coaxial model. Stanley has heard from one of Joyces staff about the new product costs and is upset and worried for his job because the new costs show the Coaxial model to be losing, rather than making money. At first, Stanley condemns the new cost system, whereupon Joyce explains the practice of activitybased costing and why it is more accurate than the companys present system. Even more worried now, Stanley begs Joyce, Massage the figures just enough to save the line from being discontinued. You dont want me to lose my job do you? Anyway, nobody will know. Joyce holds firm but agrees to recompute all her calculations for accuracy before submitting her costs to management. b What are the overriding principles that management accountants are held to under the IMA Statement of Ethical Practice and why are they important? c Who are the stakeholders that are affected by Joyces actions? Be specific in terms of naming the stakeholders and indicating how they are impacted positively or negatively and why. d What are Joyces ethical obligations to the company? To her friend, Stanley? e Using the IMA Statement of Ethical Professional Practice, identify the standards that Joyce would violate should she go along with Stanleys request. Be specific and explain why the standard would be violated. f How could Joyce help her friend yet still uphold her ethical obligations?
Joyce Sanders, the cost accountant for Lakeland Drone Manufacturing Company, recently installed activitybased costing at the firms Southern plant where three models, the Tricopter, the Hexacopter, and the Coaxial are manufactured. Joyces new product costs for those three models show that the companys traditional costing system had been significantly under costing the Coaxial model. This was due primarily to the lower sales volume of the Coaxial compared to the Hexacopter and the Tricopter. Before completing her analysis and reporting these results to management, Joyce is approached by her friend Stanley Toler, who is the production manager for the Coaxial model. Stanley has heard from one of Joyces staff about the new product costs and is upset and worried for his job because the new costs show the Coaxial model to be losing, rather than making money. At first, Stanley condemns the new cost system, whereupon Joyce explains the practice of activitybased costing and why it is more accurate than the companys present system. Even more worried now, Stanley begs Joyce, Massage the figures just enough to save the line from being discontinued. You dont want me to lose my job do you? Anyway, nobody will know. Joyce holds firm but agrees to recompute all her calculations for accuracy before submitting her costs to management.
b What are the overriding principles that management accountants are held to under the IMA Statement of Ethical Practice and why are they important?
c Who are the stakeholders that are affected by Joyces actions? Be specific in terms of naming the stakeholders and indicating how they are impacted positively or negatively and why.
d What are Joyces ethical obligations to the company? To her friend, Stanley?
e Using the IMA Statement of Ethical Professional Practice, identify the standards that Joyce would violate should she go along with Stanleys request. Be specific and explain why the standard would be violated.
f How could Joyce help her friend yet still uphold her ethical obligations?
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