Question
Rita Lane is the accountant for Outdoor Living, a manufacturer of outdoor furniture that is sold through specialty stores and Internet companies. Lane is responsible
Rita Lane is the accountant for Outdoor Living, a manufacturer of outdoor furniture that is sold through specialty stores and Internet companies. Lane is responsible for reviewing the standard costs and making recommendations for adjustments to the controller. While reviewing the standards for the coming year, the following ethical issue arises:
Outdoor Livings management is starting a continuous improvement policy that requires a 10% reduction is standard costs each year for the next three years. Dan Jacobs, manufacturing foreman of the Teak furniture line, asks Lane to set loose standard costs this year before the continuous improvement policy is implemented. Jacobs argues that there is no other way to meet the tightening standards while maintaining the high quality of the Teak line.
Requirement #1. Use the IMAs ethical guidelineshttp://www.imanet.org/docs/default-source/press_releases/ethics_prof_prac.pdf?sfvrsn=2 to identify the ethical dilemma in this situation. Specific location of the ethical guidelines changes at the website, http://www.imanet.org/ so you may need to search for them but at the time of this posting, they were located under the Resources & Publications" tab, then the "Ethics Center" link and then click on a IMAs Statement of Ethical Professional Practice link for full information on the ethical guidelines.
Requirement #2. Identify the relevant factors in this situation and suggest what Lane should recommend to the controller.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started