Summary:Professional ethics and reporting divisionperformance. Hannah Gilpin is the controller ofBlakemore Auto Glass, a division of Eastern Glass andWindow. Blakemore replaces and installs windshields.Her division has been under pressure to improve itsdivisional operating income. Currently, divisions ofEastern Glass are allocated corporate overhead basedon cost of goods sold. Jake Myers, the president of thedivision, has asked Gilpin to reclassify $50,000 ofinstallation labor, which is included in cost of goodssold, as administrative labor, which is not. Doing so willsave the division $20,000 in allocated corporateoverhead. The labor costs in question involveinstallation labor provided by trainee employees. Myersargues,"the trainees are not as efficient as regularemployees so this is unfairly inflating our cost of goodssold. This is really a cost of training (administrativelabor) not part of cost of goods sold." Gilpin does notsee a reason for reclassification of the costs, other thanto avoid overhead allocation costs.Required:1. Describe Gilpin's ethical dilemma.2. What should Gilpin do if Myers gives her a directorder to reclassify the costs?

Ethics from an accounting perspective is all about adhering to the guidelines and principles based…

Summary: Professional ethics and reporting division performance. Hannah Gilpin is the controller of Blakemore Auto Glass, a division of Eastern Glass and Window. Blakemore replaces and installs windshields. Her division has been under pressure to improve its divisional operating income. Currently, divisions of

Summary: Professional ethics and reporting division performance. Hannah Gilpin is the controller of Blakemore Auto Glass, a division of Eastern Glass and Window. Blakemore replaces and installs windshields. Her division has been under pressure to improve its divisional operating income. Currently, divisions of

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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