Juan Dela Cruz is a production manager in a manufacturing company. He recently instructed e production department to replace a steel component of the product with plastic to reduce it costs. Since making the change, there has been a sharp increase in product returns due to alfunction. In order to hide his poor decision, he instructs you, the accountant, to not record e returns. Juan Dela Cruz also told the manufacturing department to simply replace the returned its with a new plastic component and put the repaired units back into finished goods. (a) What could be the effect of the production manager's instruction to hide the returns in the Cost of Sales section? (b) Is it ethical for the production manager to give the above instructions i. to you as an accountant and

Juan Dela Cruz is a production manager in a manufacturing company. He recently instructed e production department to replace a steel component of the product with plastic to reduce it costs. Since making the change, there has been a sharp increase in product returns due to alfunction. In order to hide his poor decision, he instructs you, the accountant, to not record e returns. Juan Dela Cruz also told the manufacturing department to simply replace the returned its with a new plastic component and put the repaired units back into finished goods. (a) What could be the effect of the production manager's instruction to hide the returns in the Cost of Sales section? (b) Is it ethical for the production manager to give the above instructions i. to you as an accountant and

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 7E: Rachel Boyce, president of a company that manufactures electronic components, has a number of...

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