Read the scenario below, and address the subsequent requirements.

Emma is the plant manager of an electronics company. Plant managers are paid a salary and get an additional bonus equal to 5% of their base salary if their division meets or exceeds target profits for the year. The bonus is determined after the companys annual financial report has been prepared and issued to shareholders.

Emmas division uses a process costing system where the estimate of the percentage completion of ending work in process inventories affects the unit costs of finished goods and therefore the cost of goods sold. (All units completed and transferred out of the final processing department were sold.)

Emma just received preliminary profit figures for her division which show it is within $200,000 of making the years target profits. To earn her bonus, Emma simply needs to convince James, her lead production supervisor, to increase the estimate of the percentage complete of ending work in process inventory. James has already submitted the percentage completion figures to corporate headquarters.

In your post, address the following questions:

1. What are the ethical issues in this process costing environment? What are the risks?

2. Do you think Joe should go along with Emma's request to alter estimates of the percentage completion? Why or why not?