Titan Hotels operates a chain of hotels in the northeast. Each hotel is operated by a manager and an assistant manager/controller. Turnover of additional hotel staff, those who run the front desk, clean rooms, etc., is usually very high, given they are part-time, have a second job or are training for other positons in the chain.

Sheila Dunn, the assistant manager/controller for the Albany hotel, has asked her new bookkeeper, Dyonne, to help prepare the Albany hotels master budget. The budget is prepared annually and sent to company headquarters for approval. Once approved, the master budget is used to evaluate operations and personnel. The budget affects managements bonuses and also which hotels in the chain will receive funds for capital improvements (such as a renovated lobby, replace old TV monitors, etc.)

When the Dyonne was almost finished, Sheila asked him to increase amounts budgeted for labor costs and supplies by 20%. When asked why, Sheila replied the hotel manager, George Flowers, had demanded slack be added to the budget. Sheila explained that increasing the estimates gave her flexibility in running the hotel. Because the company tightly controls capital improvement funds, Sheila can use the extra funds to add a new breakfast nook to the current small breakfast area or to pay bonuses to selected the employees she values.

Required:

Put yourself in Dyonnes position and answer the following questions. Consider each question carefully and thoughtfully. Please answer each question in order, fully and completely for credit. Answers that are incomplete, or do not address the question asked, will not receive credit.

Questions:

1. What are the relevant facts of this case?
2. List three distinct ethical concerns in this business decision Dyonne may have. (Do not merely repeat facts of the case!)
3. Sheila states the request to increase the labor and supplies estimates by 20% provides slack in the master budget. What does she mean by slack? Why is it important to Sheila (and George) that slack be present in the budget?
4. Who are the stakeholdersthe people, directly and indirectly, who may be affected by Sheila and Georges demand for budgetary slack?
5. How will the plan to use inflated approved labor and supplies costs for capital improvements, bonuses, etc. influence employee and other stakeholders behavior?
6. What are Dyonnes possible alternatives?
7. What are Dyonnes realistic/practical constraints?
8. What action should Dyonne take?