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The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz Co. should be 2% of net credit sales.The president of Ruiz Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which reflects a 6% growth rate, will be a more sustainable rate for Ruiz Co.
Instructions
(a) Who are the stakeholders in this case?
(b) Does the president's request pose an ethical dilemma for the controller?
(c) Should the controller be concerned with Ruiz Co.'s growth rate? Explain your answer.
Discuss each request below for a budget revision, putting what you see as both sides of the argument and reach a conclusion as to whether a budget revision should be allowed.
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1. A manufacturing shop is designed to operate most efficiently at an output of 550 units perday. In the past month the plant produced 490 units. What was its capacity utilization ratelast month?
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