Reference no: EM133097793
Case Study 1.
Tess Brown is the Budgeting VP for Expo International, a large publicly traded corporation. Ms. Brown was very upset with John Smith, a Divisional Manager, after reviewing the mid-year budget reports because Mr. Smith's department has not spent all the monies allocated for new equipment purchases, i.e. computers, copiers, etc. Mr. Smith indicated that his department did not need new equipment at this time. However, he would like to spend the money on employee training. Tess told John that it is not his job to decide how monies should be spent. In fact, Mr. Smith was reprimanded by his Supervisor because he has not spent the monies as directed. Tess told John that if he does not spend the monies as directed by the end of the third quarter, the monies will be re-allocated to Julie Davis, who is also a Divisional Manager, for equipment purchases in her department. Julie will spend the money allocated to her department as directed regardless of whether the equipment is needed. Additionally, Tess told John that his budget for next year will be significantly reduced.
1. Has Tess Brown violated any ethical standards? Please explain.
2. If you were Mr. Smith, what would you do? Why?
3. What changes should Expo International make to improve resource allocation within the organization?
Case Study 2.
Robert White is the Controller of The Chisel Company. The Chisel Company uses a standard cost system. Every month Robert prepares flexible budget performance reports for the Managers within the organization. The performance report shows favorable and unfavorable variances for variable overhead and fixed overhead items. Steve Perkins is a Production Manager within The Chisel Company. Robert and Steve do NOT get along. In fact, Steve complained to the CFO of the company that Robert's performance reports are useless. Steve wants to receive the reports that he received before Robert became Controller. According to Steve, the old reports were very useful because they were based on the static budget instead of the flexible budget. Robert was not very happy that Steve has been complaining to his boss, the CFO, about the flexible budget performance reports. Thus, Robert decided to get back at Steve. After all, he is in charge of financial reporting. Robert decided to depreciate all of the equipment in Steve's department using the double-declining-balance method instead of the straight-line method even though the straight-line method is in accordance with the company policy. As a result, Steve next flexible budget performance report showed a significant unfavorable variance for fixed overhead.
1. Do you agree with Steve's understanding of flexible budget reporting? Please explain.
2. Are Robert's actions ethical? Please explain.
3. What impact will Robert's actions have on The Chisel Company?
Case Study 3.
Let's assume you work for an international retailer with hundreds of stores around the world. You are a Manager of one of the retail stores.
1. What types of managerial information do you need to effectively manage the store?
2. What kind of ethical issues would you encounter?
3. How is this information different than what the CEO, CFO and the Shareholders of the organization would want/need.