Chester Marx,the new Vice-President of Finance at Tempco,Inc. ,has just finished reviewing the company's financial statements.The company appears to be losing profits steadily.In fact,profits have dropped by 30 percent over the last two years.Upon further investigation,Marx learned that the decrease was attributable to the decline in sales resulting from higher prices than competitors.Since the company has recently changed its production method,Marx thinks the company should adopt a more relevant product costing system.The controller,Ted Vince,believes the higher sales price is necessary to cover costs.Vince,who has been controller for 20 years,feels that the company has come out of downturns before and will again.He is unaware of activity-based costing techniques and argues the current costing system has been serving the company well for a long time.What are the ethical considerations in this situation?

Question

Quizplus · Accepted Answer

The Answer of Chester Marx,the new Vice-President of Finance at Tempco,Inc. ,has just finished reviewing the company's financial statements.The company appears to be losing profits steadily.In fact,profits have dropped by 30 percent over the last two years.Upon further investigation,Marx learned that the decrease was attributable to the decline in sales resulting from higher prices than competitors.Since the company has recently changed its production method,Marx thinks the company should adopt a more relevant product costing system.The controller,Ted Vince,believes the higher sales price is necessary to cover costs.Vince,who has been controller for 20 years,feels that the company has come out of downturns before and will again.He is unaware of activity-based costing techniques and argues the current costing system has been serving the company well for a long time.What are the ethical considerations in this situation?

Chester Marx,the New Vice-President of Finance at Tempco,Inc