Maria Rivera, cost accountant for Emprersas Lawnmower, recently adopted the cost-based method based on activities at the lawnmower plant where three models are manufactured: The 8 Horsepower Road Runner, the 12 Horsepower Antelope and the 18-Cheetah horsepower.

According to ABC, the new manufacturing costs for these three models show that the company's traditional cost system had significantly underestimated the cost of the 18-horsepower Cheetah model. This was mainly due to the lower sales volume for this model.

Before completing her analysis and reporting these results to management, Maria is approached by her friend Pedro, who is the Production Manager for the 18-horsepower Cheetah model. Pedro has heard from one of Maria's employees about the new costs of the three lawnmower models and is upset and worried about his work because the new costs show that the Cheetah model is losing, rather than making money. At first, Pedro blames the new ABC cost system. However, Maria explains the practice of activity-based cost calculation and why it is more accurate than the company's current system for a single general cost allocation rate. Even more worried now, Pedro begs Maria, "play a little with the calculations, just enough to save the line of being discontinued." You don't want me to lose my job, right? Anyway, nobody will know.

QUESTIONS:

a) Who are the parties affected or interested in this situation?

(b) What are the ethical considerations in this situation?

(c) What are Maria's ethical obligations to the company?

(d) What are Maria's ethical obligations to her friend?