Question;Curtis Rich, the cost accountant for high power mower company recently installed activity based costingat High power St Louis Lawn tractor where three models: 8 hp blade runner, 12 hp quick cut, and18 hp super cut are manufactured. Curtis's new product costs for these three models showthat the companies traditional costing system had been significantly under-costing the 18hp super cut. This was due primarily to the lower sales volume of the super cut compared toblade runner and quick cut.Before completing his analysis and reporting the results to management, Curtis isapproached by his friend Ed Gray, who is the production manager for the 18 hp super cutmodel. Ed has heard from one of Marcus's staff about the new product cost and is upset andworried for his job because new cost show the super cut to be loosing rather than makingmoney.At first, Ed condemns the new cost system where upon Curtis explains the practice ofactivity based costing and why it is more accurate than the companies present system. Evenmore worried now, Ed begs Curtis, "Massage the figures just enough to save the line from being discontinued. You do not wantme to loose my job, do you? Anyway, no body will know".Curtis holds firm but agrees to recompute all his calculations for accuracy before submitting his cost to management.a) Who are the stakeholders in this situation?b) What, if any, are the ethical considerations in this situation? (Curtis's ethical consideration? Ed's ethical consideration? Management's ethical consideration?c) What are Curtis's ethical obligations to the company? and to his friend?
Paper#39025 | Written in 18-Jul-2015Price : $22