Reference no: EM13824112
LRF Printing provides printing services to many different corporate clients. Although LRF bids most jobs, some jobs, particularly new ones, are negotiated on a “cost-plus” basis. Cost-plus means that the buyer is willing to pay the actual cost plus a return (profit) on these costs to LRF.
Alice Reiley, controller for LRF, has recently returned from a meeting where LRF's president stated that he wanted her to find a way to charge more costs to any project that was on a cost-plus basis. The president noted that the company needed more profits to meet its stated goals this period. By charging more costs to the cost-plus projects and therefore fewer costs to the jobs that were bid, the company should be able to increase its profit for the current year.
Alice knew why the president wanted to take this action. Rumors were that he was looking for a new position and if the company reported strong profits, the president's opportunities would be enhanced. Alice also recognized that she could probably increase the cost of certain jobs by changing the basis used to allocate manufacturing overhead.
Instructions
(a) Who are the stakeholders in this situation?
(b) What are the ethical issues in this situation?
(c) What would you do if you were Alice Reiley?
|
Evidently uses the inventory valuation method
: 10th Generation Electronics had two transformers in its inventory, one purchased in February for $11,800 and the other acquired in September for $13,300. In December, they sold one of the transformers to Ram Enterprises for $16,400 and reported a gro..
|
|
Effect of stock split
: Gino's Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino's Restaurant Corporation, which had 51,000 shares of common stock outstanding, declared a 3-for-1 stock split. What will be the number of shares out..
|
|
What kind of companies adopts activity based costing
: What are 3 benefits of adopting Activity Based Costing in an organization? What kind of companies adopts Activity based costing? What are 3 limitations (disadvantages) of Activity Based Costing?
|
|
Dividends per share
: Michelangelo Inc., a software development firm, has stock outstanding as follows: 30,000 shares of cumulative 4%, preferred stock of $25 par, and 38,000 shares of $75 par common. Calculate the dividends per share on each class of stock for each of th..
|
|
What are the ethical issues in situation-printing service
: LRF Printing provides printing services to many different corporate clients. Although LRF bids most jobs, some jobs, particularly new ones, are negotiated on a “cost-plus” basis. Cost-plus means that the buyer is willing to pay the actual cost plus a..
|
|
Net cash flows-operating activities using indirect method
: During 2010, Diaz Corporation had net income of $41,000. Included on its income statement were depreciation expense of $2,300 and amortization expense of $300. During the year, Accounts Receivable increased by $3,400, Inventories decreased by $1,900,..
|
|
What are the estimated total costs-regression analysis
: What are the estimated total costs in a month in which there are 3,000 meals prepared/sold, 20 jobs, 2 new products and 4 new customers?
|
|
Limited liability company with operating agreement
: Ben Bowman and Savannah Mapes formed a limited liability company with an operating agreement that provided a salary allowance of $89,000 and $71,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio ..
|
|
Cost-volume-profit analysis-personal financial decisions
: Cost-volume-profit analysis can also be used in making personal financial decisions. For example, the purchase of a new car is one of your biggest personal expenditures. It is important that you carefully analyze your options.
|