Manager: If I can reduce my costs by $40,000 during this last quarter, my division will show a profit that is 10% above the planned level, and I will receive a $10,000 bonus. However, given the projections for the fourth quarter, it does not look promising. I really need that $10,000. I know of one way that I can qualify. All I have to do is lay off my three most expensive sales-people. After all, most of the orders are in for the fourth quarter, I can always hire new sales personnel at the beginning of the next year. Guide questions: What is the right choice for the manager to make? Why did the ethical dilemma arise? Is there any way to redesign the accounting reporting system to discourage the type of behavior that the manager is contemplating?

Manager: If I can reduce my costs by $40,000 during this last quarter, my division will show a profit that is 10% above the planned level, and I will receive a $10,000 bonus. However, given the projections for the fourth quarter, it does not look promising. I really need that $10,000. I know of one way that I can qualify. All I have to do is lay off my three most expensive sales-people. After all, most of the orders are in for the fourth quarter, I can always hire new sales personnel at the beginning of the next year. Guide questions: What is the right choice for the manager to make? Why did the ethical dilemma arise? Is there any way to redesign the accounting reporting system to discourage the type of behavior that the manager is contemplating?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 6P

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Manager: If I can reduce my costs by Php 40,000 during this last quarter, my division will show a profit that is 10% above the planned level, and I will receive a Php 10,000 bonus. However, given the projections for the fourth quarter, it does not look promising. I really need that Php 10,000. I know of one way that I can qualify. All I have to do is lay off my three most expensive sales people. After all, most of the orders are in for the fourth quarter, and I can always hire new sales personnel at the beginning of the next year. What is the right choice for the manager to make? Why did the ethical dilemma arise? Is there any way to redesign the accounting reporting system to discourage the type of behavior that the manager is contemplating?
If I can reduce my cost by 40,000 during this last quarter, my division will show a profit that is 10% above the planned level, and I will receive a 10,000 bonus. However, given the projections for the fourth quarter, it does not look promising. I really need that 10,000. I know of one way that I can qualify. All I have to do is lay off my three expensive salespeople. After all, most of the orders as in for the fourth quarter, and I can always hire new sales personnel at the beginning of the last year. Is there any way to redesign the accounting reporting system to discourage the type of behavior that the manger is contemplating?
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