Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

تمرين 50

Ethics in Budgeting/Budgetary Slack Norton Company, a manufacturer of infant furniture and carriages, is in the initial stages of preparing the annual budget for the coming year. Scott Ford recently joined Norton's accounting staff and is interested in learning as much as possible about the company's budgeting process. During a recent lunch with Marge Atkins, sales manager, and Pete Granger, production manager, Scott initiated the following conversation:

Required
1. Marge Atkins and Pete Granger have described the use of budgetary slack.
a. Explain why Marge and Pete might behave in this manner, and describe the benefits they expect to realize from the use of budgetary slack.
b. Explain how the use of budgetary slack can adversely affect Marge and Pete personally, and the organization as a whole.
2. As a management accountant, Scott Ford believes that the behavior described by Marge and Pete may be unethical and that he may have an obligation not to support this behavior. By citing the specific standards from the IMA's "Statement of Ethical Professional Practice" (www.imanet.org), explain why the use of budgetary slack may be unethical.
(CMA Adapted)