1. What are the relevant facts?
• Ryan was recently hired as the Chief Accountant for a relatively small firm
• Sid, the VP of sales, is concerned that the company will not reach their sales quota (200,000 units)
• CEO requires the contribution margin to be $2.00 per unit in order to achieve a pre-tax profit of $85,000
• Due to the variable costs of $4.00 per unit, the selling price must be $6.00 o Competitors are selling similar products o at lower prices
• Variable costs must decrease in order to sell products at a competitive price
• Ryan believes that they cannot change their cost structure in the short-run
• Maintenance and quality testing costs $.7 per unit o Costing $140,000 per 200,000 units
• Sid believes that turning maintenance and quality control into fixed costs in the solution and …show more content…
What are the possible alternatives?
• Ryan could simply tell Sid no or require that he gain proper clearance form the CEO
• Ryan could choose to discuss with Sid why he feels the proposal may be unethical and work on a possible alternative
• Ryan could immediately consult the CEO (blow the whistle) with Sid’s proposal, either outing him for unethical behavior or to seek his opinion o He could simply present the same proposal without mentioning Sid’s name in order to protect Sid’s reputation and avoid conflict with Sid o He could choose to anonymously provide information to the CEO
• Ryan could analyze the situation on his own before making a decision, in order to ensure the proposal is legitimate
• Ryan could consult with the different parties involved and seek their opinion on the matter
• While impractical, Ryan could always quit his position
5. What are the ethics of the
• Ryan was recently hired as the Chief Accountant for a relatively small firm
• Sid, the VP of sales, is concerned that the company will not reach their sales quota (200,000 units)
• CEO requires the contribution margin to be $2.00 per unit in order to achieve a pre-tax profit of $85,000
• Due to the variable costs of $4.00 per unit, the selling price must be $6.00 o Competitors are selling similar products o at lower prices
• Variable costs must decrease in order to sell products at a competitive price
• Ryan believes that they cannot change their cost structure in the short-run
• Maintenance and quality testing costs $.7 per unit o Costing $140,000 per 200,000 units
• Sid believes that turning maintenance and quality control into fixed costs in the solution and …show more content…
What are the possible alternatives?
• Ryan could simply tell Sid no or require that he gain proper clearance form the CEO
• Ryan could choose to discuss with Sid why he feels the proposal may be unethical and work on a possible alternative
• Ryan could immediately consult the CEO (blow the whistle) with Sid’s proposal, either outing him for unethical behavior or to seek his opinion o He could simply present the same proposal without mentioning Sid’s name in order to protect Sid’s reputation and avoid conflict with Sid o He could choose to anonymously provide information to the CEO
• Ryan could analyze the situation on his own before making a decision, in order to ensure the proposal is legitimate
• Ryan could consult with the different parties involved and seek their opinion on the matter
• While impractical, Ryan could always quit his position
5. What are the ethics of the