a.) Snack-Foods division president may want to play the end-of-year games because there may be a bonus for the division president if they get certain earnings for the year. Not only a bonus for the division president; but there may be a bonus for the division itself. With that being said he could use that for the other employees to help participate in the year-end games. If corporate has seen them fallen behind, then these year-end games maybe able to apply to job security or even promotions.
b.) Each year-end games
•Acceptable- If they plan to have it maintained until January of the following year there would be no work shown and they would not need to put a transaction regarding the maintenance to record. It would now rely on the company, or someone in charge of the packing equipment to keep it maintenance.
•Unacceptable-If they extend the close of the current fiscal year’s sales beyond December 31; they would be falsely reporting the following year’s sales- very unethical.
•Unacceptable- To alter dates of shipping documents of next January’s sales and to record them as sales in December would be just like the above statement a false record within the accounting files.
•Acceptable- If they reduce the number of TV sports that run in December, and then this would only reduce their advertising cost for that month, and if they then plan to run more January that will just increase their cost for that year, in which there is no harm in doing. Advertising cost is one of the easiest items you can change and pick up again in the future.
•Unacceptable-If they plan to delay billing in the December advertisement until January of the next year and then having the agency alter invoices to conceal the December date; this would be wrong and should be charged for the current year it runs. The advertising agency would be false reporting Snack-Foods accounting books.
c.) Taylor observably believes that Warren Ryan wants her to be unethical within Snack-Foods. She should first tell Ryan how she feels about the year-end games. Once Taylor has approached Ryan and discuss how she feels and turns out Ryan still wants her to participate, then Taylor should go to corporate since she is in the division and Ryan is also within the division she should press her issue to higher up management. If nothing comes about Taylor can always transfer to another Snack-Foods division. If nothing works for her she can always resign from unethical practices.
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2010
(In thousands of dollars)
Raw materials inventory, beginning$10
Add: Purchases of raw materials$170
Raw materials available for use$180
Deduct: Raw materials inventory, ending$50
Raw materials used in production$230
Factory Supervisor’s salary$70
Misc. Factory Costs$12
Total manufacturing overhead$210
Total Manufacturing cost$660
Add: work in progress inventory, beginning$80
Deduct: work in progress inventory, ending$60
Cost of Goods Manufactured$680
Cost of Goods sold:
Finished goods inventory, beginning$110,000
Add: Cost of goods manufactured$680,000
Goods available for sale$790,000
Deduct: Finish goods inventory, ending$100,000$690,000
Selling & Admin expenses:
Net Operating Income($20,000)
a.) The number of equivalent units for Materials and for Conversions Cost based of the FIFO method of costing inventory.