MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
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Textbook Question
Chapter P, Problem P.7E
Ethics In Business
Consumers and attorney generals in more than 40 states accused a prominent nationwide chain of auto repair shops of misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments. Lynn Sharpe Paine reported the situation as follows in Managing for Organizational Integrity” Harvard Business Review Volume 72 Issue 3:
In the face of declining revenues, shrinking market share, and an increasingly competitive market. . . management attempted to spur performance of its auto Centers.. . . The automotive service advisers were given product-specific sales quotas—sell so many springs shock absorbers, alignments, or brake jobs per shift—and paid a commission based on sales. . .
[F]ailure to meet quotas could lead to a transfer or a reduction in work hours. Some employees spoke of the “pressure. Pressure, pressure” to bring in sales.
This pressure-cooker atmosphere created conditions under which employees felt that the only way to satisfy top management was by selling products and services to customers that they didn’t really need.
Suppose all automotive repair businesses routinely followed the practice of attempting to sell customers unnecessary parts and services.
Required:
- How would this behavior affect customers? How might customers attempt to protect themselves against this behavior?
- How would this behavior probably affect profits and employment in the automotive service industry?
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(Political Motivations for Policies) Ever since the unethical actions of some employees of Enron Corp. first came to light, ethics in accounting has been in the news with increasing frequency. The unethical actions of the employees essentially involved their selection of certain accounting policies for the company. In many instances, GAAP does allow firms some flexibility in their choice of legitimate accounting policies. This is true, for example, in choosing an inventory cost formula. However, the company's choice of policies may ultimately be influenced by several specific factors.
Instructions
State three of these factors and explain why each of them may influence an accounting policy choice.
The head of the accounting department is not satisfied with the implementation of the new system. He believes that the new system will result in job losses for many of the bookkeepers. They are threatening industrial action. In your role as project sponsor, what should you do to resolve the situation?
Chapter P Solutions
MANAGERIAL ACCOUNTING F/MGRS.
Ch. P - Prob. P.1QCh. P - Pick any major television network and describe...Ch. P - If you had to decide whether to continue making a...Ch. P - Why do companies prepare budgets?Ch. P - Prob. P.5QCh. P - Why is managerial accounting relevant to...Ch. P - Prob. P.7QCh. P - Why do management accountants need to understand...Ch. P - Prob. P.9QCh. P - Pick three industries and describe how the risks...
Ch. P - Pick any large company and explain three ways that...Ch. P - Why do companies that implement Lean Production...Ch. P - Why are leadership skills important to managers?Ch. P - Why are leadership skills important to managers?Ch. P - Prob. P.15QCh. P - Prob. P.16QCh. P - Prob. P.17QCh. P - Why do companies take a physical count of their...Ch. P - Why do companies use sequential prenumbering for...Ch. P - Planning and Control Many companies use budgets...Ch. P - Prob. P.1ECh. P - Prob. P.2ECh. P - Ethics and the Manager Richmond, Inc., operates a...Ch. P - Prob. P.4ECh. P - Prob. P.6ECh. P - Ethics In Business Consumers and attorney generals...Ch. P - Prob. P.8ECh. P - Prob. P.9ECh. P - Corporate Social Responsibility In his book...Ch. P - Prob. P.11ECh. P - Cognitive Bias and Decision Making During World...Ch. P - Ethics and Decision Making Assume that you just...
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