1. Was it ethical for Sami to enlist the help of friends and family to drive up the number of click-throughs to Bohlander's website? Why or why not?

I do not believe it was ethical for Sami to enlist the help of family and friends because Sami ultimately manipulated the data by doing this. Not only does this lead to skewed data for the company and analysts, but it also gives the company a false sense of hope. They estimate that only 20% of people who click through the ads will actually make a purchase. With her friends and family continuously going through and clicking through the ads, it's going to impact that percentage even more since they have no intention of actually purchasing any products. Additionally, each banner ad click through costs Bohlander Botanicals money. Although each click through costs abut $0.60, if there were 1,000,000 visitors on the site clicking through the ad, then that would cost the company $6,000. Again, Sami's family and friends would have an impact on total cost if they continuously went through and clicked through the ad.

2. Would your answer to part (a) change if Sami's friends and family members actually made a purchase from Bohlander? Why or why not?

My answer would not change to part a if her friends and family actually purchased products from the company. If there was a way to prove that Sami's call for help had no influence on them, then that might be a different story. If Sami hadn't asked for help, but her friends or family were genuinely curious about the products and wanted to learn more and ended up purchasing a product, that would be okay since Sami didn't ask for the data to be skewed. However, even if her friends and family made a purchase, they would not make a purchase every single time they clicked through the ad so the data would still ultimately end up being warped. The effectiveness of the advertisement would not be accurately represented.

3. What impact did Sami's actions have on Bohlander Botanicals?

Sami's decision has a negative impact on the company overall. The data clearly shows what needs to go in to a successful advertisement campaign and skewing numbers isn't going to help anybody for future campaigns. The costs are going to look a lot hire to acquire new customers. The data currently shows that the expected total cost per quarter is $14,700. Next, we can expect that 20% of click throughs will actually make a purchase. So if we use 1,000,000 impressions as our baseline, we can calculate the cost to acquire a new customer by taking the total cost of $14,700 and dividing it by (1,000,000 impressions 1%clickthroughs * 20% purchases). This gives us a cost of $7.35 for each acquired customer. If that 1% increases through Sami's actions, then the average cost for acquiring a new customer would be misrepresented. This would impact the accounting and finance departments and it would cause confusion among the company.

"A final word of caution about cost behavior and estimation: Cost behaviors and estimates are valid only within the relevant range, or the normal level of operating activity. Beyond the relevant range, cost relationships are likely to change, and with them, cost estimates" (Davis & Davis, 2020).

Reference:

Davis C. E., & Davis E. (2020). Managerial Accounting, Enhanced eText(4th ed.). John Wiley& Sons. ISBN-13: 9781119577669

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