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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 29
Ethics and Standard Costs
Farmer Frank's produces items from local farm products and distributes them to supermarkets. Over the years, price competition has become increasingly important, so Susan Kramer, the company's controller, is planning to implement a standard cost system for Farmer Frank's. She asked her cost accountant, Margaret Chang, to gather cost information on the production of blueberry preserves (Farmer Frank's most popular product). Margaret reported that blueberries cost $.75 per quart, the price she intends to pay to her good friend who has been operating a blueberry farm that has been unprofitable for the last few years. Because of an oversupply in the market, the price for blueberries has dropped to $.60 per quart. Margaret is sure that the $.75 price will be enough to pull her friend's farm out of the red and into the black.
Required
Is Margaret's behavior regarding the cost information she provided to Susan unethical Explain your answer.
(CMA adapted)
Farmer Frank's produces items from local farm products and distributes them to supermarkets. Over the years, price competition has become increasingly important, so Susan Kramer, the company's controller, is planning to implement a standard cost system for Farmer Frank's. She asked her cost accountant, Margaret Chang, to gather cost information on the production of blueberry preserves (Farmer Frank's most popular product). Margaret reported that blueberries cost $.75 per quart, the price she intends to pay to her good friend who has been operating a blueberry farm that has been unprofitable for the last few years. Because of an oversupply in the market, the price for blueberries has dropped to $.60 per quart. Margaret is sure that the $.75 price will be enough to pull her friend's farm out of the red and into the black.
Required
Is Margaret's behavior regarding the cost information she provided to Susan unethical Explain your answer.
(CMA adapted)
Explanation
Verified
Verified
FF produces the local farm products like...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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