Ethics in Accounting: A Decision-Making Approach
1st Edition
ISBN: 9781118928332
Author: Gordon Klein
Publisher: WILEY
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Textbook Question
Chapter 6, Problem 29CP
The owner of Giuseppis’s Italian Restaurant willingly sells its delicious, but expensive, strawberry cheesecake for half-price after 10 p.m. because he will have to throw it away as stale if it remains unsold. Food servers are instructed to offer cheesecake to customers at full price. If they hesitate or complain about being “too full for dessert,” the food servers then are instructed to offer the cheescake at half-price.
- a. Is it ethical for the food servers to first offer the cheesecake at full price, knowing that the restaurant owner is willing to lower the price to half-off?
- b. Is it ethical for the food server to offer the cheesecake at half-price at 9:30 p.m. to a customer who was unwilling to pay full price?
- c. Is it ethical for the food server to immediately offer the cheesecake at half-price at 10:00 p.m. to her friends who visited the restaurant in part because she had told her friends about the bargain price of the cheesecake?
- d. Assume that her friends visiting the restaurant did not know about cheesecake becoming available at half-price after 10 p.m. When the friends order the cheesecake at full price at 9:45 p.m., the food server tells them to wait 15 minutes, so they can get the cheesecake at half-price. Is her conduct ethical?
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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a
commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-
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predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for
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models.
The company's managers identified six activity cost pools and related…
Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a
commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-
purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of
multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct
labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the
predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for
the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial
models.
The company's managers identified six activity cost pools and related…
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Ethics in Accounting: A Decision-Making Approach
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