28) Managerial Financial Accounting Assignments AP7-1 Solution

28) Managerial Financial Accounting Assignments AP7-1 Solution

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AP7-1
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Correct. Decision Making and Ethics [LO 1, Ethics] Joan Paxton, VP of marketing for Supertone Recording Equipment, has developed a marketing plan for presentation to the company's president. The plan calls for television ads, something the company has never used. As part of her presentation, she will indicate the impact of the TV ads on company profit as follows: Incremental sales from increased exposure $9,181,000 Less: Incremental cost of goods sold $3,672,400 Cost of TV ads 2,539,000 6,211,400 Incremental profit $2,969,600 While Joan is quite confident in the cost of the ads and the incremental cost of goods sold if sales are $9,181,000, she is quite uncertain about the sales increase. In fact, she believes that her estimate is on the high side. However, she also believes that if she puts in a more conservative estimate, such as $7,078,000, the president will not go along with the TV ads even though they still will generate substantial profits at $7,078,000 of incremental sales. Is it unethical of Joan to bias her estimate of incremental sales on the high side, given that she
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This note was uploaded on 06/21/2011 for the course MANAGERIAL MT425 taught by Professor Hodgson,k during the Spring '11 term at Kaplan University.

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28) Managerial Financial Accounting Assignments AP7-1 Solution

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