! Required information Problem 14-56 Special Order; Ethics (LO 14-3, 14-4, 14-5) [The following information applies to the questions displayed below.) Winner's Circle, Inc., manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 3,100 medals each month. Current monthly production is 2,325 medals. The company normally charges $525 per medal. Variable costs and fixed costs for the current activity level of 75 percent of capacity are as follows: $ Production Costs Variable costs: Manufacturing: Direct labor Direct material Marketing Total variable costs Fixed costs: Manufacturing Marketing Total fixed costs 348,750 244, 125 174,375 767, 250 $ $ 208,050 210,450 $ 418,500 $1,185, 750 Total costs $ Variable cost per unit Fixed cost per unit 330 180 Average unit cost $ 510 Winner's Circle has just received a special one-time order for 775 medals at $300 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Donato, a management accountant with Winner's Circle, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it. After examining the costs, Donato suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw material as the current quote seems high. LePenn insisted that the prices are in line with other vendors and told her that she was not to discuss her observations with anyone else. Donato later discovered that LePenn is a brother-in-law of the owner of the current raw-material supply vendor. Req 2A Req 2B Compute both the new average unit cost and the incremental unit cost for the special order. (Do not round intermediate calculations. Round your answers to 2 decimal places.) New average unit cost Incremental unit cost Problem 14-56 Part 3 3. Identify the considerations that Donato should include in her analysis of the special order. (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.) 1 The future customer potential of the buyer of the special order, generating additional revenues. ? Acceptance of the special order could result in higher bonuses for the department's staff. ? Possible problems with other customers who pressure the company for similar treatment. Problem 14-56 Part 4 4. Which of the following statements are true regarding Donato's possible response to the ethical conflict arising out of the controller's insistence that the company avoid competitive bidding? (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.) She should never go to the next-higher managerial level as this would mean bypassing of levels of authority and create further damage to her relations with the manager. | Ethical conflicts are a part of everyday office life and is no cause for resigning. She should follow the company's established policies on such matters. ? The ethical requirement of competence would imply that Donato should try and resolve the conflict herself instead of discussing with other advisors. ? If the ethical conflict still exists after exhausting all avenues of internal review, she may have to resign from the company and submit an informative memorandum to the board of directors. ? Donato should clarify relevant concepts by confidential discussions with an objective advisor to obtain an understanding of possible courses of action
