Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepte

Question

Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a boy or girl friend, spouse, or other loved one. Top management will not approve this product in view of its high break-even point.

Mark knows that if he can reduce the fixed costs in his proposal, then the break-even point will be reduced to a level that top management finds acceptable. Working with a friend in the company’s finance department, Mark finds ways to credibly misstate the estimated fixed costs of producing DNA-diamonds below those that any objective person would estimate.

Mark knows that if the product is successful (and he is certain that it will be), then top management will not find out about the understatement of fixed costs. Mark believes that this product, once it is successful, will benefit the shareholders and employees of the company.

Required

Are Mark’s actions ethical? Explain.

(Lanen 102)

Lanen, William, Shannon Anderson, Michael Maher. Fundamentals of Cost Accounting, 5th Edition. McGraw-Hill Learning Solutions, 01/2016. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

Explanation / Answer

The actions of Mark is not ethical. Presenting ficticious or wrong data to top management is not ethical in any way. He should give the actual amount of fixed cost and should convince them with the targeted sales quantity.

Whether any action is ethical or unethical is decided irrespective of whether it is providing benefit to the company or not. So here the actions of Mark and the accountant is not ethical.

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