What are the ethical issues involved in the case, and how would you resolve them?
Q: Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammerheads,…
A: Asset turnover: This ratio analyzes number of times sales or revenue generated from the available…
Q: Thom Lutz started a retail clothing business two years ago. Lutz’s first year was very successful,…
A: Inventory management aids businesses in determining which goods to order and when to order them. It…
Q: ABC Company is a manufacturing firm and has operated for twenty years now. As a very established…
A: SOLUTION- WORKING NOTE -1 SCHEDULE FOR COST OF GOODS MANUFACTURED- PARTICULARS AMOUNT AMOUNT…
Q: A 100-year-old manufacturing firm has had an excellent reputation for high-quality products, with…
A: Answer: Correct option is option (b) A younger workforce will likely be less educated and trainable.…
Q: Hunger Industries operated as a monopolist for the past several years, earning annual profits…
A: Estimated loss due to regaining monopoly position is $100 million Estimated annual profit is $40…
Q: The number of networked computers and of support personnel have more than doubled in the last 4…
A: The information services department can be clearly identified as a cost centre. This department…
Q: Steve Hausmann, a production engineer at Euro Fashion-USA, a European-style furniture company, was…
A: The current truck is completely depreciated but has a market value of $7,500 in the market
Q: Pollenti Company has just merged with another industrial firm whose business had been failing.…
A: Appraisal Costs are the expenditures incurred on inspection for frauds in products before they are…
Q: Herfy Foods Incorporated is now one of the biggest manufacturers of buns in the Philippines. Though…
A: The company is one of the biggest manufacturers of bun and started its operation in 2010. The…
Q: t a recent board meeting, the president and CEO got into a heated argument about whether to shut…
A: Answer a) Yes, Miami plant should be allowed to operating in Short Run.
Q: Edward L. Vincent is CFO of Energy Resources, Inc. The company specializes in the exploration and…
A: 1. Calculation of annual depreciation as follows: So, Annual depreciation is $300,000.
Q: Reeve Lumber Company has a small information systems department consisting of five people. A backlog…
A:
Q: Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past…
A: Activity based costing (ABC) is the costing method which allocates the overheads (activity…
Q: Phoenix Press produces consumer magazines. Thehouse and home division, which sells home-improvement…
A: The motivations for G to improve the division’s year-end operating earnings are listed as follows:…
Q: He has asked for your help in evaluating this plan.
A: Break-even Point: It refers to a point in the level of operations at which a company experiences…
Q: Which division should be closed if Manuel is most concerned with increasing long-run profits?
A: Answer:- High end suits Short term impact Controllable margin Winter out wear = 540000 High end…
Q: Parmalat is one of the leading firms in in the long-life milks, yogurt, and juices market. The…
A: Auditing is a process which is done on the financial statements on the company by an auditor in…
Q: Maxwell Company produces a variety of kitchen appliances, including cooking ranges and dishwashers.…
A:
Q: Phoenix Press produces consumer magazines. Thehouse and home division, which sells home-improvement…
A: The steps Gellar must do about the pressure to improve performance are as follows: Gellar must…
Q: Soring Motor Corporation, manufactures reliable energy efficient automobiles. While quality vehicles…
A: 1) Financial Measures- Focuses on profitability,growth and shareholder value, such as return on…
Q: Holton Chairs had been an innovative designer and producer of quality office chairs since Arnold…
A: Recording Journal entries in the books of Holton-Central Holdings Inc. DATE PARTICULARS Ref No…
Q: The CFO of PKD Corporation is very uncomfortable with its current risk exposure related to the…
A:
Q: The following scenario describes the X Company with 25M revenue and approximately 300 employees. X…
A: (a) Operational issue It relates to the issues faced in the day to day operations of a company.…
Q: Dana Wise, president of Tidwell Company, recently returned from a conference on quality and…
A: 1. Prepare a simple quality cost report classifying costs by category.
Q: Ethics and the Manager Richmond. Inc., operates a chain of 44 department stores. Two years ago, the…
A: 1.
Q: SENE ELL Co. recently recalled 6 million cars due to faulty third-party ignition switches that were…
A: The most significant risk management lesson to date from the company recall is: B) The Company…
Q: The vice president of manufacturing is perplexed. When the new Sunbeam Plant bega rations three…
A: Here asked for multi question as per guidelines we will solve first question for you. If you need…
Q: Consider each of the following independent scenarios:a. Terrin Belson, plant manager for the laser…
A: A responsibility center is a separate business entity with its own aims and objectives, personnel,…
Q: ABC Company is a manufacturing firm and has operated for twenty years now. As a very established…
A:
Q: In Akhwan Company, operations director Mr Tamad recently realized there had been an increase in…
A: Internal controls are policies incorporated by the Management to safeguard the assets of the…
Q: Stacy Cummins, the newly hired controller at Merced Home Products, Inc., was disturbed by what she…
A: Requirement 1: Lansing has set up very liberal standards where the standard prices and standard…
Q: Jerry Prior, Beeler Corporation’s controller, is concerned that net income may be lower this year.…
A: a. The Stakeholders involved in this situation are Jerry Prior. Other Accounting staff members like…
Q: The chief executive officer (CEO) of Cobalt Inc. just read an article written by a business…
A: Lean manufacturing focuses on reducing the cost and minimizing waste involved in the manufacturing,…
Q: Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past…
A: The answer is given below:
Q: The Board of Directors were worried over the dwindling financial performance and precarious…
A: Ratio Analysis - The ratio is the technique used by the prospective investor or an individual or…
Q: BendOR, Inc., manufactures control panels for the electronics industry and has just completed its…
A:
Q: Wells Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage…
A: The generally accepted accounting principles (GAAP) are the principles that should be followed by…
Q: Mindspin Labs Inc. is a manufacturing firm that has experienced strong competition in its…
A: ROI, simply return on investment, seems to be a frequently used metric for calculating the amount of…
Q: ABC Airlines is a commercial airline that targets business and nonbusiness travelers. In recent…
A: The profits can be arrived from the income statement of the company. All the revenues, and expenses…
Q: Horizon Corporation manufactues personal computers. The company began operations in 2012 and…
A: Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve first three…
Q: Danna Martin, president of Mays Electronics, was concerned about the end-of-the year marketing…
A: Non value added activities are those activities that add on the cost of the product without…
Q: Holton Chairs had been an innovative designer and producer of quality office chairs since Arnold…
A: A journal entry is made to record the financial transaction in the books of accounts. Note: As you…
Q: Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past…
A: Units costs are the cost for one product. They are computed by dividing total cost with number of…
Q: Alexandria Ltd. manufactures high-quality pens. For many years the company manufactured only one…
A: Manufacturing overheads are indirect costs and expenses related with the manufacturing and…
ENVIRO-WEAR had reached $25,000,000 in sales in its sixth year, when a disastrous set of events put the firm and its prospects in a tailspin. One of the key sales managers was overheard by a news reporter telling jokes about the poor quality of the firm’s clothing, and the news of it spread quickly. Also, rumors (largely unfounded) spread at the same time that the firm was not really as environmentally conscious in its manufacturing and packaging as it claimed. The result was an immediate falloff in sales, and some retailers were returning the goods. Mike intends to fire the manager and deny publicly any association with the manager’s comments, as well as to defend the firm’s environmental record.
Required
What are the ethical issues involved in the case, and how would you resolve them?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- In 2011, Milton Thayne, president of Carbondale Electronics, received a report indicating that quality costs were 31 percent of sales. Faced with increasing pressures from imported goods, Milton resolved to take measures to improve the overall quality of the companys products. After hiring a consultant in 20x0, the company began an aggressive program of total quality control. At the end of 20x5, Milton requested an analysis of the progress the company had made in reducing and controlling quality costs. The Accounting Department assembled the following data: Required: 1. Compute the quality costs as a percentage of sales by category and in total for each year. 2. Prepare a multiple-year trend graph for quality costs, both by total costs and by category. Using the graph, assess the progress made in reducing and controlling quality costs. Does the graph provide evidence that quality has improved? Explain. 3. Using the 20x1 quality cost relationships (assume all costs are variable), calculate the quality costs that would have prevailed in 20x4. By how much did profits increase in 20x4 because of the quality improvement program? Repeat for 20x5.In 20x5, Major Company initiated a full-scale, quality improvement program. At the end of the year, Jack Aldredge, the president, noted with some satisfaction that the defects per unit of product had dropped significantly compared to the prior year. He was also pleased that relationships with suppliers had improved and defective materials had declined. The new quality training program was also well accepted by employees. Of most interest to the president, however, was the impact of the quality improvements on profitability. To help assess the dollar impact of the quality improvements, the actual sales and the actual quality costs for 20x4 and 20x5 are as follows by quality category: All prevention costs are fixed (by discretion). Assume all other quality costs are unit-level variable. Required: 1. Compute the relative distribution of quality costs for each year and prepare a pie chart. Do you believe that the company is moving in the right direction in terms of the balance among the quality cost categories? Explain. 2. Prepare a one-year trend performance report for 20x5 (compare the actual costs of 20x5 with those of 20x4, adjusted for differences in sales volume). How much have profits increased because of the quality improvements made by Major Company? 3. Estimate the additional improvement in profits if Major Company ultimately reduces its quality costs to 2.5 percent of sales revenues (assume sales of 10 million).Recently, Ulrich Company received a report from an external consulting group on its quality costs. The consultants reported that the companys quality costs total about 21 percent of its sales revenues. Somewhat shocked by the magnitude of the costs, Rob Rustin, president of Ulrich Company, decided to launch a major quality improvement program. For the coming year, management decided to reduce quality costs to 17 percent of sales revenues. Although the amount of reduction was ambitious, most company officials believed that the goal could be realized. To improve the monitoring of the quality improvement program, Rob directed Pamela Golding, the controller, to prepare monthly performance reports comparing budgeted and actual quality costs. Budgeted costs and sales for the first two months of the year are as follows: The following actual sales and actual quality costs were reported for January: Required: 1. Reorganize the monthly budgets so that quality costs are grouped in one of four categories: appraisal, prevention, internal failure, or external failure. (Essentially, prepare a budgeted cost of quality report.) Also, identify each cost as variable (V) or fixed (F). (Assume that no costs are mixed.) 2. Prepare a performance report for January that compares actual costs with budgeted costs. Comment on the companys progress in improving quality and reducing its quality costs.
- Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past several years despite an increase in revenues. With profits declining and revenues increasing, Rockness knew there must be a problem with costs. Rockness sent an e-mail to his executive team under the subject heading, “How do we get Rockness Bottling back on track?” Meeting in Rockness’s spacious office, the team began brainstorming solutions to the declining profits problem. Some members of the team wanted to add products. (These were marketing people.) Some wanted to fire the least efficient workers. (These were finance people.) Some wanted to empower the workers. (These people worked in the human resources department.) And some people wanted to install a new computer system. (It should be obvious who these people were.) Rockness listened patiently. When all participants had made their cases, Rockness said, “We made money when we were a smaller, simpler company. We have grown,…Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past several years despite an increase in revenues. With profits declining and revenues increasing, Rockness knew there must be a problem with costs. Rockness sent an e-mail to his executive team under the subject heading, “How do we get Rockness Bottling back on track?” Meeting in Rockness’s spacious office, the team began brainstorming solutions to the declining profits problem. Some members of the team wanted to add products. (These were marketing people.) Some wanted to fire the least efficient workers. (These were finance people.) Some wanted to empower the workers. (These people worked in the human resources department.) And some people wanted to install a new computer system. (It should be obvious who these people were.) Rockness listened patiently. When all participants had made their cases, Rockness said, “We made money when we were a smaller, simpler company. We have grown, added…Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2012 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer (CFO) to Jim Fielding, the company controller, included the following comments:If we don’t do something about the large amount of unsold computers already manufactured, our auditors will require us to record a write-down. The resulting loss for 2021 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales, Inc., in Oklahoma City. I know the company’s president, and he will accept the inventory and acknowledge the shipment as a purchase. We can record the sale in 2021 which will boost our loss to a profit. Then J.B. Sales will simply…
- Phoenix Press produces consumer magazines. Thehouse and home division, which sells home-improvement and home-decorating magazines, has seen a 20%reduction in operating income over the past 9 months, primarily due to an economic recession and a depressedconsumer housing market. The division’s controller, Sophie Gellar, has felt pressure from the CFO toimprove her division’s operating results by the end of the year. Gellar is considering the following options forimproving the division’s performance by year-end: a. Cancelling two of the division’s least profitable magazines, resulting in the layoff of 25 employees.b. Selling the new printing equipment that was purchased in January and replacing it with discardedequipment from one of the company’s other divisions. The previously discarded equipment no longermeets current safety standards.c. Recognizing unearned subscription revenue (cash received in advance for magazines that will bedelivered in the future) as revenue when cash is received…Phoenix Press produces consumer magazines. Thehouse and home division, which sells home-improvement and home-decorating magazines, has seen a 20%reduction in operating income over the past 9 months, primarily due to an economic recession and a depressedconsumer housing market. The division’s controller, Sophie Gellar, has felt pressure from the CFO toimprove her division’s operating results by the end of the year. Gellar is considering the following options forimproving the division’s performance by year-end:a. Cancelling two of the division’s least profitable magazines, resulting in the layoff of 25 employees.b. Selling the new printing equipment that was purchased in January and replacing it with discardedequipment from one of the company’s other divisions. The previously discarded equipment no longermeets current safety standards.c. Recognizing unearned subscription revenue (cash received in advance for magazines that will bedelivered in the future) as revenue when cash is received…Manuel Inc. produces textiles in many different forms. After recording lower than anticipated profits last year, Manuel has decided to shut down one of its divisions that is not performing well. The accounting manager has compiled the following data on the two divisions being considered for closing and has asked you to evaluate the short-term and long-term effects on profits of closing each division. Which division should be closed if Manuel is most concerned with increasing long-run profits? Winter Outerwear High-End Suits Net revenues $ 1,200,000 $ 5,200,000 Variable costs 660,000 2,160,000 Contribution margin 540,000 3,040,000 Controllable fixed costs 0 2,020,000 Controllable margin 540,000 1,020,000 Noncontrollable fixed costs 770,000 1,540,000 Contribution by division $ (230,000 ) $ (520,000 ) multiple choice Winter Outerwear High-End Suits Closing either would have the same…
- Pollenti Company has just merged with another industrial firm whose business had been failing. Pollenti immediately conducted a thorough study of the new company's work processes, and produced a report including the data shown below: •A new inspection process is recommended to minimize defective raw materials. It would cost $12,000 to implement. •Shoddy business practices are resulting in excessive warranty costs?$15,000 more than normal due mainly to material failure. •Reengineering of the assembly line will increase productivity. It would cost $18,000 to implement. •Inefficient workplace design is costing $5,000 in unnecessary rework costs. •Estimated amount of lost profits due to dissatisfied customers who turn to the competition is $80,000. Based on the above, what is the amount of appraisal costs, if any, included here? A) $18,000 B) $12,000 C) $15,000 D) ZeroIn May 2001, the Securities and Exchange Commission sued the former top executives at Sunbeam, chargingthe group with financial reporting fraud that allegedly cost investors billions in losses. Sunbeam Corporationis a recognized designer, manufacturer, and marketer of household and leisure products, including Coleman,Eastpak, First Alert, Grillmaster, Mixmaster, Mr. Coffee, Oster, Powermate, and Campingaz. In the mid-1990s,Sunbeam needed help: its profits had declined by over 80% percent, and in 1996, its stock price was down over50% from its high. To the rescue: Albert Dunlap, also known as “Chainsaw Al” based on his reputation as aruthless executive known for his ability to restructure and turn around troubled companies, largely by eliminating jobs.The strategy appeared to work. In 1997, Sunbeam’s revenues had risen by 18 percent. However, in April 1998,the brokerage firm of Paine Webber downgraded Sunbeam’s stock recommendation. Why the downgrade? PaineWebber had noticed unusually…Stacy Cummins, the newly hired controller at Merced Home Products, Inc., was disturbed by what she haddiscovered about the standard costs at the Home Security Division. In looking over the past several yearsof quarterly income statements at the Home Security Division, she noticed that the first-quarter profits were always poor, the second-quarter profits were slightly better, the third- quarter profits were againslightly better, and the fourth quarter always ended with a spectacular performance in which the HomeSecurity Division managed to meet or exceed its target profit for the year. She also was concerned to findletters from the company’s external auditors to top management warning about an unusual use of standardcosts at the Home Security Division.When Ms. Cummins ran across these letters, she asked the assistant controller, Gary Farber, if he knewwhat was going on at the Home Security Division. Gary said that it was common knowledge in the companythat the vice president in charge…