BTC Ethical Dilemma in The ABC Manufacturing Plant Case Study

User Generated

Rzxry30

Business Finance

Blackhawk Technical College

Description

The assigment is to evaluate the ethical case of Scott Hopkins at ABC Manufacturing. The teacher would like to know:

What the ethical dilemma is (introduction with the facts given)

Who the benefiting party is and how the are affected.

Who the harmed parties are and how they are affected.

What resources can be used to make a better informed decision.

What the alternatives could be-can be ones that would not be recommended and how the recomendations would affect the parties.

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Blackhawk Technical College Accounting Program Five Step Model for Dealing with Ethical Dilemmas Ethics cases will require you to use the knowledge and skills that you have acquired throughout your career in the Accounting Program. These cases are designed to enhance the accounting mind in each of you as students. They will test your ability to identify and analyze an ethical dilemma. You will be required to identify all viable alternatives to a situation and weigh the impact of each alternative on the interested parties through written communication. Each ethics case will require a typed memo to your instructor. Be sure to format the memo like a business memo (following all the guidelines for a professional memo as identified by the Accounting instructors), and include in the Subject or RE: line the name of the company involved. Be sure to follow the following four step model when responding to all ethical dilemmas assigned in the Accounting Program. Step 1: Restate the facts and identify the ethical dilemma. An ethical dilemma occurs when a company considers a decision about an accounting method or disclosure and that decision leads to different information being communicated to stakeholders. Step 2: Identify the following: a. What stakeholders may benefit from the proposal/situation? b. What stakeholders may be harmed by the proposal/situation? Explain how the stakeholder is affected. Step 3: Explain the accounting rules, principles, and standards related to the situation. Step 4: Identify all alternatives and discuss the impact of each alternative on the financial statements. Include the ones you would not recommend. Each alternative should be in a separate paragraph. a. Identify the alternative methods available. b. Discuss the effect of each alternative on the financial statements. c. Identify which generally accepted accounting principle is adhered to or violated? d. Evaluate the relevance and reliability of the alternatives. Step 5: Provide your recommendation. Select the best alternative and provide supporting documentation for your decision. To: From: Date: Re: Kathleen Fratianne (Student’s Name) January 28, 2017 Ethic Case Format Example The first paragraph is the introduction. Important facts regarding the case should be restated. These facts need to identify the parties involved and provide enough background information so any reader has a full understanding of the scope of the problem and motivation of the parties involved. This paragraph will end with the following statement: The ethical dilemma is……………. Stakeholders Benefited In this section identify the parties that benefit from the transaction/proposal/situation and how. Stakeholders Harmed In this section identify the parties that are harmed by the transaction/proposal/situation and how. Guiding Rules/Principles/Standards In this section discuss the guiding laws, rules, principles, or standards that could be used to make an informed decision. Alternatives In this section list the alternative course of actions that could be taken and how each of these actions affect the financial statements. Each alternative must be in its own paragraph. Recommendation In this section make a recommendation based on the above analysis. The alternative should provide the most useful, relevant, free from bias, and reliable information that follows GAAP. Justify the recommendation. Additional comments:    Write in 3rd person Do not use a memo template that comes with a software program Must be typed Ethics Case – Cost Classification Scott Hopkins, the new Plant Manager of ABC Manufacturing Plant, has just reviewed a draft of his yearend financial statements. Scott receives a year-end bonus of 10% of the plant’s operating income before tax. The year-end income statement provided by the plant’s controller was disappointing. After reviewing the numbers, Scott demanded that the controller go back and “work the numbers” again. Scott insisted that if he didn’t see a better operating income number the next time around he would be forced to look for a new controller. ABC Manufacturing classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished goods warehouse costs of $3,250,000 are classified as period expenses. Scott has suggested that warehousing costs be included as product costs because they are “definitely related to our product.” The company produced 200,000 units during the period and sold 180,000 units. As the controller reworked the numbers, he discovered that if he included warehousing costs as product costs he could improve operating income by $325,000. He was also sure these new numbers would make Scott happy. Write a memo following the ethical case guidelines. Things to think about and include in your memo: 1. Show how operating income would improve by $325,000 just by classifying the preceding costs as product cost instead of period expenses. 2. Is Scott correct in his justification that these costs “are definitely related to our product?” Blackhawk Technical College Accounting Program Ethical Dilemma Outline Step 1: Dilemma – Restate the facts and identify the dilemma. The ethical dilemma here is … Step 2: Stakeholders – Identify the parties that would be affected and what the possible results could be depending on the action taken. List the parties benefited and how they are affected. 1. 2. 3. 4. … List the parties harmed and how they are affected. 1. 2. 3. 4. … Step 3: Guiding rules/principles/standards – what are the resources that could be used to make an informed decision? 1. 2. 3. 4. … Step 4: Alternatives – Identify all actions that could be taken (even ones you would not recommend). Remember, there could be more than two choices! List all alternatives: 1. 2. 3. Explain how each alternative will affect each of the interested parties: Step 5: Recommendation – Choose the best alternative and justify. The best alternative is __________________ because it _______________________ …
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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.Hello, Buddy! I've completed the assignment, and here is the final document. I made sure to follow all the instructions provided for the assignment. Please have a look at it. In case of any questions or editing, please reach out, and I'll assist. Attached is an outline and the final paper. The outline is for your reference of the paper and is not submittable. Stay safe Howdy.

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Ethical Dilemma

Student’s Name
University Affiliation
Course Name and Course Number
Instructor’s Name
Date of Submission

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To:
From:
Date:
Re: ABC Manufacturing Plant’s Ethics Case of Cost Classification
Dilemma
The ethical dilemma in the ABC Manufacturing plant is identifying a better operating income
number by the plant’s new manager. The primary reason behind the ethical dilemma is that ABC
Manufacturing plant classifies its costs as directly related to their manufacturing of products as
product costs. In this case, the dilemma arises when they inventory the costs and expense them
afterward as cost of goods sold after making sales to the products. On the other hand, the plant's
expenses, all-inclusive of the finished goods warehouses costs, are termed as period expenses
making their decision more complicated. However, the new plant's manager's decision to include
warehouse costs expenses as product...


Anonymous
Really useful study material!

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