Question
without any further analysis or investigation. When he is booking some payroll entries the following week, Collin realizes that he made an error in the
without any further analysis or investigation. When he is booking some payroll entries the following week, Collin realizes that he made an error in the CVP analysis he did for the sales commission project. He failed to include the monthly salaries of the sales staff in his computations. Collin is in a panic. If he tells John Wallace of his mistake, Collin is afraid he will not be offered a full-time position upon completion of his internship. Collin decides to keep quiet and not let the controller know of his error. He reasons that it is unlikely that the difference between what he projected versus the actual expenses will be discovered since Horner does not create detailed monthly operating statements. Requirements 1. Using the IMA Statement of Ethical Professional Practice as an ethical framework, answer the following questions: a. What is (are) the ethical issue(s) in this situation? b. What are Collin Hoffman's responsibilities as a management accountant? c. What are John Wallace's responsibilities as a management accountant? d. What are Meghan Peyton's responsibilities as a management accountant? 2. What would be the impact on breakeven sales from failing to include the fixed monthly salaries? Would the breakeven using the erroneous data be lower or higher than the correct breakeven (the breakeven calculation including the monthly salaries)? Do you think this error would be likely to influence the decision of whether to proceed with the new sales commission proposal? 3. Discuss the specific steps Collin should take to resolve the situation. Refer to the IMA Statement of Ethical Professional Practice in your response. A7-77 Impact of increases in direct materials on product breakeven
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