Ethics in Management Accounting

Through this strategy, a strength our company possesses is the ability to offer a premium product for every customer in each segment of the industry.  We compete by giving all of our customers the very best, up-to-date products. Another strength is that since we have a premium product line, we are able to charge an above average price to our customers, thus leading to higher profitability in the long run.

Even though a business has an economic need to make a profit to stay in business, companies also have a social and ethical responsibility to the stakeholders served. Ethical dilemmas can result from an employee choosing between making a decision in the best interest of an organization compared to making a decision based on a personal agenda. Enron is an example of a business that crossed ethical boundaries for stakeholder agendas by using innovative accounting to falsify the financial earnings of the company that eventually destroyed the company. One of the ethical issues demonstrated by the new COO was his adoption of the absorption-costing model. With the increase of manufacturing units from 120,000 units in 2002 to 175,000 units in 2003, the use of absorption costing allowed the per unit fixed manufacturing overhead cost to decrease in 2003 as compared to 2002. The following shows the comparison between using absorption and variable costing models when calculating the total cost of sales and the operating income.

Ethics in business addresses the ‘right’ and ‘wrong’ behaviours of business practises, and how these practices impact the employees, shareholders, the general public and the environment.

* product’s contribution margin under conservative estimates is at 79% which represent a very lucrative product profitability

* Bo and Mo do explicitly say that it is up to Kevin to decide how to increase his productivity.

Ethical standards in business are important for every leader to know and understand. The book Ethics 101: What Every Leader Needs to Know by: John C. Maxwell discusses ethics in the world today. When people make unethical choices, the reason they do because of three main pitfalls. People do what is most convenient to them, people tend to do what they must do to win, and people rationalize their choices with relativism. In this summary, Maxwell’s definition of business ethics will be framed, examples of ethical standards and guidelines, the meaning and contrast of ethical thinking and ethical behavior, and how to avoid these major pitfalls to live an ethical life. The

Ethics in any industry is important, but for Accounting professionals and those in need of their services, it is a particularly stressed element. Information provided by accountants is used to make major decisions, including investing, downsizing, expanding, etc, so accountants are expected to be competent, reliable, and have a high degree of professional integrity. Because of these high expectations, the professional accountancy industry, like many other professions, has adopted professional codes of ethics (Woelfel, 1986). These ethical codes go above and beyond the requirements for state or federal laws and regulations. There are several professional organizations within the

Businesses, investors, creditors rely on accounting ethics. The accounting profession requires honesty, consistency with industry standards, and compliance with laws and regulations. The ethics increase the responsibility and integrity of accounting professionals, and public trust. The ethical requirements influence the management behavior and decision-making. The financial scandal of Enron and Arthur Anderson demonstrates the failure of fundamental ethical framework, such as off-balance sheet transactions, misrepresentation of financial statements, inaccurate disclosure, manipulations with earnings, etc. The confronted accounting profession and concern for ethics in businesses forced regulators to revise the conceptual framework of accounting processes.

Imagine trusting your hard-earned money like your retirement savings to a financial adviser or Certified Public Accountants (CPA) only to lose it all in a fraudulent Ponzi scheme. In today’s world of business many organizations, financial planners and accountants are in the news due to the financial ethical breaches that have affected their customers, employees, and the general public. A CPA has to be responsible for their audits and take any punishments as a result of their mistakes, incompetence or illegal actions. CPAs are expected to have integrity in their work,

Q1. Based on the 2004 statement of profit and loss data (Exhibits 1 and 2), do you agree with Water’s decision to keep product 103?

1. The Sales Rep. A sales representative for a struggling computer supply firm has a chance to close a multimillion-dollar deal for an office system to be installed over a two-year period. The machines for the first delivery are in the company’s warehouse, but the remainder would have to be ordered from the manufacturer. Because the manufacturer is having difficulty meeting the heavy demand for the popular model, the sales representative is not sure that the subsequent deliveries can be made on time. Any delay in converting to the new system would be costly to the customer; however, the blame could be placed on the manufacturer. Should the sales representative close the deal without advising the customer

1. It is a fact that item 345 has lost market share and as the product manager I would be concerned about it. By retaining FF20 price I can gain market share only if competition increases their price to FF20. At the outset this seems unlikely because competition has

Firstly, it is strategically beneficial for the company to continue to produce products A, C, and D. However, you should discontinue production of product B, as it is unprofitable and is losing the company money. Product B has been losing the company $2,307 per reel. If the company deems it is essential to keep producing product B in order to retain their customer base, we recommend changing the production schedule. For example, during times of lower demand, you can produce products such as B that do not make as much money, but you will still retain your customers’ business and satisfy their needs. During times of higher demand, by discontinuing the production of product B, the company will be able to produce the more profitable products such as A, C, and D.

If withdrawing the market, group's overhead reduces by 2000. So, as long as contribution margin is above 2000, it can be continued.

Moreover, this kind of conflict between Philip Anderson and Stuart & Co. is a proof that it is difficult to establish a cost control respecting ethical concerns. Indeed, to realize a cost control management, a firm has to fixed budget targets but these objectives have to be possible and controllable. Perhaps in this case, the objectives fixed for Philip are too difficult if the manager want to respect some virtues during the selling. For its success, an enterprise has to realize a good turnover but this turnover is good only if there are some customers that is why cost control is as important as ethical issues. With its thinking way, the branch of this firm does not keep the focus on its manager (Philip Anderson) and on its customers.