Rick Pines and Joe Lopez are the plant managers for High Mountain Lumbers particle board division. High Mountain Lumber has adopted a just-in-time management philosophy. Each plant combines wood chips with chemical adhesives to produce particle board to order, and all product is sold as soon as it is completed. Laura Green is High Mountain Lumbers regional controller. All of High Mountain Lumbers plants and divisions send Green their production and cost information. While reviewing the numbers of the two particle board plants, she is surprised to find that both plants estimate their ending work-in-process inventory at 75% complete, which is higher than usual. Green calls Lopez, whom she has known for some time. He admits that to ensure their division would meet its profit goal and that both he and Pines would make their bonuses (which are based on division profit), they agreed to inflate the percentage completion. Lopez explains, Determining the percent complete always requires judgment. Whatever the percent complete, well finish the work-in-process inventory first thing next year. How would inflating the percentage completion of ending work-in-process inventory help Pines and Lopez get their bonuses? The particle board division is the largest of High Mountain Lumbers division. If Green does not correct the percentage completion of this years ending work-in-process inventory, how will the misstatement affect High Mountain Lumbers financial statements? Evaluate Lopezs justification, including the effect, if any, on next years financial statements. Address the following: What is the ethical issue resulting from this situation? What should Green do?