Reference no: EM132379897

Question

The company has a 35% excess capacity in its factory the president put a new program in place for anyone who obtains new customers offering 25% of the gross profit on work for new customers. the average gross profit rate had been 30% of the contract price.

Steve wants to propose a contract to a customer that undercuts the usual pricing structure by 30% as a result the job would have no gross profit using the regular job costing system.instead Steve suggests that the overhead should only be 40% of the normal overhead rate.

Resulting in a profit of 28% steve suggests that the controller should handle this herself and no one else in the organization should know about it especially other sales people because the creative approach to overhead application might create problems

1. Does taking an order at a significantly reduced price Cause an ethical problem.

2. Does altering the accounting for a particular order cause an ethical problem

3. Does asking the controller to handle the contract and to keep the accounting confidential cause an ethical problem.