KJ Company manufactures furniture and carriages for infants. The accounting staf
ID: 2374902 • Letter: K
Question
KJ Company manufactures furniture and carriages for infants. The accounting staff is currently preparing next year%u2019s budget. Kyle Lansing is new to the firm and is interested in learning how this process occurs. He has lunch with the sales manager and the production manager to discuss further the planning process.
Over the course of lunch, Kyle discovers that the sales manager lowers sales projections 5 to 10 percent before submitting her figures, while the production manager increases cost estimates by 10 percent before submitting his figures. When Kyle asks about why this is done, the response is simply that everyone around here does it.
a. What do the sales and production managers hope to accomplish by their methods?
b. How might this backfire and work against them?
c. Are the actions of the sales and production managers unethical?
Explanation / Answer
a. sales and production managers wants to accomplish to the accounting staff that thier sales are lower and cost are more ..by decreasing revenue and increasing cost they decrease thier profit , so as to pay less tax..
by doing so they want to show their less profit so that they can clai less tax.
b. if the accounting staff catches the mangers he will qualify the report...thus the managers will be liable to be answerable to the accounting staff for such mispractise.
c. yes..if this works against them then the reputation of the firm will be hampered.
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