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Does warranty accrual recommendation create ethical dilemma

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Question - Denise Bunch is the sales manager for a tractor supply company. She earns an annual bonus based on sales minus related warranty expenses. Actual warranty expenses have varied over the past 15 years from a low of 2% of sales to a high of 10%. In the past, Bunch has recommended an estimate on the high side of the range in order to be conservative.

Required -

1. Does the warranty accrual recommendation create an ethical dilemma for Bunch? If so, explain why.

2. What percent would you recommend if you were Bunch. (Justify your answer).

Reference no: EM132772504

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