StepN ? an accountant for Westfield Company. Early this year, Scott made a highl

Question

StepN ? an accountant for Westfield Company. Early this year, Scott made a highly favorable ed 3 Juua, Kevin, 3) Scptt Bestor is next 3 years for Westfield's hot-selling computer PLEX. As a n of sales and profits over the ctio esult of the projections Scott production in this area. This decision led to dislocations of some plant personnel who were reassign to one of the company's newer plants in another state. However, no one was fired, and in fact the company expanded its workforce slightly presented to senior management, the company decided to expand Unfortunately,Scott rechecked his projection computations a few months later and found that he had made an error that would have reduced his projections substantially. Luckily, sales of PLEX have exceeded projections so far, and management is satisfied with its decision. Scott, however, is not sure what to do. Should he confess his honest mistake and jeopardize his possible promotion? He suspects that no one vwill catch the error because PLEX sales have exceeded his projections, and it appears that profits will materialize close to his projections Instructions: (a) Who are the stakeholders in this situation? (b) Identify the ethical issues involved in this situation. (c) What are the possible alternative actions for Scott? What would you do in Sçott's position? saok mistak No, shouldn To avod conthe 4) Brett Stern was hired during January 2017 to manage the home products division of Hi-Tech Products. As part of his employment contract, he was told that he would get $5,000 of additional bonus for every 1% increase that the division's profits exceeded those of the previous year. Soon after coming on board, Brett met with his plant managers and explained that he wanted the plants to be run at full capacity. consequent the company on hand. Because came on board remaine Previously, the plant had employed just-in-time inventory practices and had units only as they were needed. Brett stated that under previous management had missed out on too many sales opportunities because it didn't have enough inventory previous management had employed just-in-time inventory practices, when Brett there was virtually no beginning inventory. The selling price and variable costs per unit d the same from 2016 to 2017. Additional information is provided below. 2016 $300,000 25,000 25,000 1,350,000 $54 2017 Net income Units produced Units sold Fixed manufacturing overhead costs Fixed manufacturing overhead costs per unit $525,000 30,000 25,000 1,350,000 $45 Instructions: a) Calculate Brett's bonus based upon the net income results using variable costing. (c) Recompute actions unethical? Do you think any actions shown above. (b) Recompute the 2016 and 2017 7 bonus under variable costing. (d) Were Bret's need to be taken by the company

Explanation / Answer

Since, multiple questions have been posted and Question 3 has multiple sub-parts, I have answered the first one (Question 3).

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Part a)

The stakeholders in the given situation are Scott (accountant), other employees who were impacted, management of the company and investors/shareholders who will ultimately get affected because of Scott's projections (be such estimates turn out to be favorable/unfavorable).

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Part b)

Employees are supposed to act ethically and conduct their activities in the best interests of the company and its shareholders/investors. Unethical actions can affect the reputation and credibility of the company which in turn would adversely affect its employees. In the given case, Scott should disclose the errors to the management without focusing on his own promotion/personal interests. If Scott decides otherwise, his action would be treated as unethical. Alerting management in a timely manner would protect long term interests of various stakeholders including employees.

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Part c)

Scott should immediately inform the management about the error to prevent any future complications. If possible, he should try to find a solution to the error and report the same to the management. Communicating clearly and honestly would not only establish Scott's credibility in the eyes of management, but would also help the management in reducing the possibility of any adverse impact on the company's financials, reputation and goodwill in the short and long term.

I would have definitely reported the issue to the management had I been in the Scott's position. It is important for any employee to demonstrate ethics in his/her day to day behavior, accept mistakes and identify and report issues that can affect the company both positively/negatively.

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