Scots Sandwiches provides pre-packed meals for an airline. The contract pricing calls for Direct material+Direct Labor+Overhead+ 20% of those costs for profit. The CFO comes to you, Chris Controller, and asks the following:

It seems to me that we are not accounting for opportunity costs in our overhead. After all, if we were not doing airline meals we could be doing something else. And besides, our pricing is way below our competitors, which is how we got the bid.

Put a 40% add-on into overhead before you do the cost/plus calculation. We will still be a bit below our competitors, and the airline is still getting value. This contract is not big enough to require an audit, so no one will ever know.

We can use part of the extra to pay Christmas bonuses to our workers, they could use it.

What are the ethics of this situation? What would you do?

Discuss the ethics of the situation and possible alternatives