managerial accounting ethics - ACCT 2102 Chapter 8 Ethics Challenge Lance Prating should include the additional industrial engineering costs in the

managerial accounting ethics - ACCT 2102 Chapter 8 Ethics...

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ACCT 2102Chapter 8Ethics ChallengeLance Prating should include the additional industrial engineering costs in the report. The matching principle states that expenses should be recognized in the period they are incurred. Therefore, the additional industrial engineering costs should be included in this year’s report, even if Sanchez Engineering postponed billing the company. To exclude the additional engineering costs would be deceptive, because the report would not accurately depict the actualcosts incurred in the period. Also, the managers at Headquarters need to be aware any significant deviations from the flexible budget. The engineering costs need to be highlighted, so managers can investigate and find an appropriate solution to the problem if one exists. Casebudgetedactual# of productions54# of performances6064variable costsFixed CostsFlexible BudgetExpenses:Actor wages2400153600Stagehand wages45028800Usher wages18011520Scenery860034400Rent75048000Printed Programs17511200Publicity260010400Administrative exp.1296324004219272Total expenses340112The Munchkin TheaterFlexible BudgetFor Year Ending Dec. 31Variance AnalysisFlexiblActualVariancF/U
eeExpenses:Actor wages1536001480005600FStagehand wages2880028600200FUsher wages1152012300780UScenery34400393004900URent48000496001600UPrinted Programs1120010950250FPublicity10400120001600UAdmin. exp.4219241650542FTotal expenses3401123424002288UThis budget would not be a good indicator of the costs that would be incurred from a new production. A new production would have different numbers of actors and would have different scenery, props, and costumes. Demand for the new production might influence the

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