
(a)
Ethical case:
In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.
To discuss: If a division is reporting losses, does that mean that it should be closed.
(b)
Fixed Cost:
It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.
To explain: Reallocation of fixed costs across the division was unethical.
(c)
To explain: What Person B should do?

Want to see the full answer?
Check out a sample textbook solution
Chapter 7 Solutions
Managerial Accounting: Tools for Business Decision Making
- Can you solve this general accounting problem using accurate calculation methods?arrow_forwardCan you explain this financial accounting question using accurate calculation methods?arrow_forwardCan you provide the accurate answer to this financial accounting question using correct methods?arrow_forward
- Please provide the answer to this general accounting question using the right approach.arrow_forwardI am looking for help with this financial accounting question using proper accounting standards.arrow_forwardI need assistance with this financial accounting problem using appropriate calculation techniques.arrow_forward
- Please provide the correct answer to this financial accounting problem using accurate calculations.arrow_forwardCan you provide the accurate answer to this financial accounting question using correct methods?arrow_forwardCan you solve this financial accounting problem with appropriate steps and explanations?arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningAccounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning




