Chapter06 Solutions-Hansen6e

3 unit direct materials cost 450 95010000 014 unit

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3. Unit direct materials cost ($450 + $950)/10,000 ..................... $0.14 Unit conversion costs ($138 + $2,174.50)/9,250 .................... 0.25 Total unit cost ........................................................................... $0.39 4. Cost transferred out: 8,000 × $0.39 = $3,120 Ending work in process: (1,000 × $0.14) + (250 × $0.25) = $202.50 Loss due to spoilage: 1,000 × $0.39 = $390 5. Loss from Abnormal Spoilage ................. 390 Work in Process—Molding ................. 390 132
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6–28 1. Keri’s proposal requires Stoney to falsify the equivalent units calculation so that income and assets can be inflated and reported incorrectly. Falsification of the production report would be a violation of at least two major ethical standards: that of integrity and that of objectivity. Falsification does not allow the organization to attain its legitimate and ethical objectives. Moreover, should Stoney agree to the proposal, he would be taking action that would discredit his profession. Finally, Stoney has an ethical obligation to commu- nicate information fairly and objectively, disclosing all information that would be needed for the loan officer to fairly assess the merits of the company’s re- quest for a loan. Clearly, Stoney should not agree to falsify the production re- port. 2. Stoney has an obligation to report Keri to a superior only if an actual ethical problem exists. If Keri decides that the course of actions she is suggesting is not really in her or the company’s best interests, then no ethical problem ex- ists, and no action by Stoney is needed. 3. Should Keri insist on falsifying the division’s reports, Stoney should attempt to resolve the conflict by appealing to Keri’s immediate supervisor (and on up the ladder, if necessary) until a satisfactory resolution is achieved. If no satis- factory resolution is possible, then Stoney should resign and submit an in- formative memo to a representative of the organization. 4. In this situation, the ethical dilemma is complicated by two factors: Stoney’s age and a low likelihood of resolution by appealing to higher level authorities. Stoney’s age may make it more difficult to find alternative employment (at least at the same level and pay), and it may mean possible forfeiture of retire- ment benefits. Many students will likely respond that Stoney should still resign (assuming that resolution is not likely), recommending the ideal out- come. While Stoney’s ultimate resignation is the right choice should resolu- tion fail, students should realize that ethical behavior may often carry with it some very significant personal sacrifices. It could be argued, however, that the costs of unethical behavior are even greater. Another possibility is to encourage Stoney to see a lawyer. He has the option of fighting back, and at his age (with retirement benefits at stake), a good of- fense may be his best defense. CYBER RESEARCH CASE 6–29 Answers will vary. 133
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