An ethical question involving standard costs

Ethics in pricing ppt

Solution to Review Problem 9. A revision of standard costs in December would have resulted in lower valuations of inventories, higher cost of goods sold because of inventory write-downs, and lower net income for the year. Companies can use their CSR activities and advertise them. Ethical issues often arise in the budgeting process, particularly when employees and managers are evaluated by comparing their actual results to the budget. Photo Credits. Why is the sales budget the most important component of the master budget? In contrast, fudged numbers are usually the basis for dishonesty and fraud. Answer: To demonstrate how ethical dilemmas might arise, assume you are a manager and you help upper management establish the master budget this is the planning phase. Perhaps a long-term stock option incentive system would provide motivation to do what is best for the organization, thereby increasing shareholder value.

Many business budgeting decisions involve choices between thoughtfully dealing with the consequences of company policies and earning extra money by cutting corners. It updates the standard costs whenever costs, prices, or rates change by 3 percent or more.

Organizations must recognize this conflict and have processes in place to ensure both the interests of individual employees and the interests of the organization as a whole are served. Describe the ethical conflict that can occur between the planning and control phases of the budgeting process.

ethical issues in price discrimination

It uses these costs to price products, cost inventories, and evaluate the performance of purchasing and production managers. How does the master budget for a merchandising organization differ from the master budget for a manufacturing organization?

For example, in many countries there are environmental laws. In contrast, fudged numbers are usually the basis for dishonesty and fraud. Furthermore, you are evaluated based on achieving budgeted profit on a quarterly basis this is the control phase.

The control phase requires evaluating performance of employees by comparing actual results to the operating budget. Ethical issues often arise in the budgeting process, particularly when employees and managers are evaluated by comparing their actual results to the budget.

An ethical question involving standard costs

Similarly, corporate officers who earn tremendous bonuses based on company profits may prioritize profit over ethical considerations.

Rated 6/10 based on 94 review
Download
Essay about An Ethical Question Involving Standard Costs