Week 5 DP
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Bryant & Stratton College *
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207
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Industrial Engineering
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Feb 20, 2024
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docx
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Week 5 Discussion When provided copies of the results as a justification for distributing the bonus to the St. Bernard employees, the plant controllers at Norwood and Hartwell accused St. Bernard of manipulating the inventory figures. Reviewing the above schedule, what do you think is the nature of the accusation and how would such action affect the unit cost computation?
The case study illustrates how Cincinnati Beverages Inc.'s three plants have similar expenses and automated technology. The information provided by the plants shows that St. Bernard is the only location where work is ongoing, whereas Norwood and Hartwell have 100,000 units (50% completed) and 400,000 units (25% completed) as a final work in progress. The amount of entire units that could have been finished in a given amount of time is called equivalent production. St. Bernard's equivalent production is shown as 6,450,000 units, which is more than the output of the other two facilities because there is no ongoing work in progress. When the costs of the three factories are similar, but St. Bernard's equivalent production is higher than those of the other two, St. Bernard's unit cost is cheaper.
Unit Cost = Total Cost / Equivalent Production – 1,075,000 / 645,000 = 1.67
The St. Bernard statistics indicate that all units are completed and that there is no ending work in progress. As a result, the unit cost is lower since the corresponding production is higher.
Is there anything in the Institute of Management Accountants (IMA) Code of Professional Ethics that the St. Bernard plant controller should be aware of in this situation?
It is the IMA's duty to showcase the greatest level of morality in terms of the general public, their profession, the organizations they support, and themselves. The IMA has created ethical requirements on its members, and as a result, members are required to follow the code of ethics. They are not allowed to behave in a way that is inconsistent with the established norms, and they will not support those in their company who do the same. It is the duty of members to convey information in a fair manner and to fully disclose all facts pertaining to any reports, remarks, or suggestions that may be made. The St. Bernard plant controller should know that it is against the Code of Professional Ethics to falsify inventory figures and should avoid any actions that bring the business to shame.
Assume that the St. Bernard plant controller revises the unit cost to more accurately reflect reality. What should she do if the plant manager insists that the unit cost computation remain as it?
If the plant management is determined that the unit cost calculation will not be changed, the plant controller should refer to the IMA principles of ethical conduct, which include requirements for competence, honesty, and accountability. Members are obligated to fulfill their professional duties in line with all relevant laws, rules, and technical specifications. In addition, they must accurately evaluate important data in order to generate comprehensive, understandable reports and suggestions. Members should not take part in any activities that would compromise their ability to carry out their duties in an ethical manner. They must also avoid directly or indirectly harming the organization's ability to achieve its morally and rationally declared goals.
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