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Problem 1-31 Quality Control; Ethical Behavior (LO 1-6, 1-7, 1-10, 1-11)

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[The following information applies to the questions displayed below.] AccuSound Corporation manufactures printed circuits for stereo amplifiers. A common product defect is a drift caused by failure to maintain precise heat levels during the production process. Rejects from the 100 percent testing program can be reworked to acceptable levels if the defect is drift. However, in a recent analysis of customer complaints, Marie Allen, the assistant controller, and the quality control engineer determined that normal rework does not bring the circuits up to standard. Sampling showed that about half of the reworked circuits will fail after extended amplifier operation. The incidence of failure in the reworked circuits is projected to be about 10 percent over five years. Unfortunately, there is no way to determine which reworked circuits will fail, because testing will not detect the problem. The rework process could be changed to correct the problem, but the cost-benefit analysis for the suggested change indicates that it is not economically feasible. AccuSounds marketing analyst has indicated that this problem will have a significant impact on the companys reputation and customer satisfaction. Consequently, the board of directors would interpret this problem as having serious negative implications for the companys profitability. Allen included the circuit failure and rework problem in her report prepared for the upcoming quarterly meeting of the board of directors. Due to the potential adverse economic impact, Allen followed a long-standing practice of highlighting this information. After reviewing the reports to be presented, the plant manager and his staff complained to the controller that he should control his people better. We cant upset the board with this kind of material. Tell Allen to tone that down. Maybe we can get it by the board in this meeting and have some time to work on it. People who buy those cheap systems and play them that loud shouldnt expect them to last forever. The controller called Allen into his office and said, Marie, youll have to bury this one. The probable failure of reworks can be mentioned briefly in the oral presentation, but it should not be mentioned or highlighted in the advance material mailed to the board. Allen feels strongly that the board will be misinformed on a potentially serious loss of income if she follows the controllers orders. Allen discussed the problem with the quality control engineer, who simply remarked, Thats your problem, Marie.

Problem 1-31 Part 3

3. What should Marie Allen do? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

• Protect the interests of the company, others in the company, and herself.unanswered
• Allen must take some action to reduce her vulnerability.unanswered
• Allen should write a report to the controller detailing the probable failure of reworks, the analysis made by her and the quality control engineer, and the controller's instructions in this matter.