Nottingham Manufacturing Company allows employees to purchase, at cost, manufact

Question

Nottingham Manufacturing Company allows employees to purchase, at cost, manufacturing materials, such as metal and lumber for personal use. To purchase materials for personal use , an employee must complete a materials requisition form, which must then be approved by the employee's immediate supervisor. Gretchen MacCauley, an assistant cost accountant, charges the employee an amount based on Nottingham's net purchase cost.

Gretchen MacCauley is in the process of replacing a deck on her home and has requisitioned lumber for personal use, which has been approved in accordance with company policy. In computing the cost of the lumber, Gretchen reviewed all the purchase invoices for the past year. She then used the lowest price to compute the amount due to the company for the lumber.

Discuss whether Gretchen is behaving in an ethical and professional manner concerning her actions with the calculation of the cost of lumber for personal use.

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Explanation / Answer

No Gretchen is not behaving in a professional and ethical manner being an assistant cost accountant of the company, org. expects from him that he will make every possible steps for minimizing cost of company so as to maximize the profit in this competitive world but by doing this he is leading to loss for the company. If he continues to do this company may soon start incurring losses. Also the position in which he is sitting, if he purchases goods for his personal purpose like this we cannot expect independence and objectivity from him. Thus, whatever he is doing is not in line with his professional and ethical requirements.

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