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Breedland Case Summary

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Abby did not correctly compute the cost of the Breeland Ltd. special order. Using ABC costing Abby correctly estimated all of the costs except for the markup cost. This caused her to overestimate the total price of the order. Rather than divide by the 80 percent, Abby should have multiplied by 80 percent to calculate the cost Breeland should be billed.
I believe that Abby’s assessment of the special order costing is correct. George’s conversations with Josh should impact Abby’s estimate of the Breeland Ltc. special order, but only after the company has received the order confirmation from George. It is unethical for Abby to charge Breeland for the disposal cost and the cost of all 50 gallons if they are not actually having to dispose of the materials. Charging for disposal on items that are not actually being disposed of is also against company policy. Company policy is that all unused materials will be billed to the customer in the absence of another order for the same …show more content…

If Abby notifies Tom of a probable future change in the cost determination before Josh has confirmed his order, Abby would not be in compliance with confidentiality. However, if Abby does not inform Tom of a change in his costs after Josh has confirmed his order, she will be using the information for an unethical advantage. The correct timing of Abby notifying Tom of a change in cost will ensure her compliance with the IMA standard of confidentiality. To follow the IMA standards, Abby must complete a new cost determination after Josh has confirmed his order. If George will not sign off on the new cost determination, then Abby should inform higher authority in the company and the ethical standards department of George’s unethical actions. If she fails to do so, she should be held accountable for failure to hold up the same IMA standards and principles that George has also failed to

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