Bozrah Organics produces items made from local farm products that it distributes

Question

Bozrah Organics produces items made from local farm products that it distributes to supermarkets in its local market area. Due to an increase in the price competition over the last several quarters, Abby Lane, the company's CFO and controller, is planning to implement a standard costing system for Bozrah. The company's cost management analyst was asked to gather cost information on the company's most popular product, strawberry preserves?

The analyst reported that strawberries cost $.90 per quart, the price he intends to pay to his good friend who has been operating a strawberry farm in the red (at a loss) for the last few years. Due to an oversupply in the market, the price for strawberries has dropped to $.65 per quart. The analyst is sure that the $.90 per quart price will be enough to pull his friend's farm out of trouble?

Discuss this scenario, focusing on whether the analyst's behavior regarding the cost information is unethical. Consider what the correct action should be in this situation, and explain your reasoning?

Explanation / Answer

the analyst's behavior regarding the cost information is unethical because if they sell strawberries in $.90, while in the market the cost is$.65. so rather than getting gain, they will have further loss. so its not right to sell them in $.90 per quart. instead of that they should price per quart in such a way that it attracts the customer with having atrractive price and special offers given with as there is oversupply in market

thank you, hope it helps :)

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