1. What are the sales & production managers proposing and what do you think they hope to accomplish by their methods
2. How might this backfire and work against them
3. Are the actions of the sales and production managers unethical? If you feel they are be sure to reference the IMA Statement of Ethical Principals posted in Module 1. Are their actions illegal?
4. If this was your company what would you recommend to discourage actions like this

each period from Sell Division. Parts JS13 and OC53 have the same variable cost per unit for se ides engineer- Division. Producing Part OC53 will not change Sell Division's total fixed costs. Buy Division is now The company dustries. Scott purchasing Part OC53 from an outside supplier at a price of $29 each. Hence, Buy Division won't cided to main- pay more than $29 to Sell Division for the same product. Suppose that Sell Division is producing at capacity and would have to forego some of its current ment center of sales to outside customers to handle all of Buy Division's needs for Part OC53. with the invest- Required are expected to If Sell Division accepts the $29 price to produce and sell Part OC53 to Buy Division, what will be the 6 to 21% since impact on the company as a whole? n's "operating ance at the end EXTENDING YOUR KNOWLEDGE EYK11-1. Business Decision Case The monthly sales volume of Shugart Corporation varies from 7,000 units to 9,800 units over the course of a year. Management is currently studying anticipated selling ex- penses along with the related cash resources that will be needed. Which type of budget (flexible or static) (1) should be used by Shugart in planning, and (2) will provide Shugart the best feedback $25,000 in performance reports for comparing planned expenditures with actual amounts? When Shugart's 14,000 CEO asks you why it is advantageous to use a flexible budget instead of a static budget, what is one 11.000 example you could give him? EYKI1-2. Ethics Case CJ Corporation manufactures steel rebar for use in construction. The accounting staff is currently preparing next year's budget. Bob Johnson is new to the firm and is interested in learn- 7.000 ing how this process occurs. He has lunch with the sales manager and the production manager to 4.000 discuss further the planning process. Over the course of lunch, Bob discovers that the sales manager adjusts sales projections between a flexible amount and a static amount based on which will reflect the lowest variance from actual results. The production manager does the same for cost estimates. Both managers is determined based on how low