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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Ethics and professional conduct in business
Ebenezer Manufacturing Company allows employees to purchase, at cost, manufacturing materials, such as metal and lumber, for personal use. To purchase materials for personal use, an employee must complete a materials requisition form, which must then be approved by the employee's immediate supervisor. Beth Turner, an assistant cost accountant, charges the employee an amount based on Ebenezer's net purchase cost.
Beth Turner is in the process of replacing a deck on her home and has requisitioned lumber for personal use, which has been approved in accordance with company policy. In computing the cost of the lumber, Beth reviewed all the purchase invoices for the past year. She then used the lowest price to compute the amount due the company for the lumber.
Discuss whether Beth behaved in an ethical manner.

To determine

Concept Introduction:

Cost of goods manufactured report is a term used in the managerial accounting that refers to a schedule or a statement that shows the total production costs. It includes both fixed and variable manufacturing overhead.

To Indicate:

If assistant cost accountant behaved in ethical manner

Explanation

In the given scenario Beth while requisitioned lumber for personal use, she then used the lowest price to compute the amount due the company for the lumber. Instead of taking lowest, Beth should have taken Average price from all the past invoices. If he had taken average price, then she had behaved in ethical manner...

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