Recycling Equipment

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Recycling Equipment
In the case “Recycling Equipment”, David Hendricks is a cost accountant for a small, closely held chemical manufacturing company. He faces an ethical dilemma. David has two analyses; the first analysis is purchase of the equipment in the lower estimate of cost savings, it would increase the company’s net income but it would decrease the return on investment and affects the bonuses for company managers. The second analysis is in the higher estimate of cost savings, the recycling equipment would increase both net income and ROL that the board of directors and stockholders are very interested in. David has a decision to make: whether to presents both analyses to Mr. Jones, the plant manager, he will not support the project, or gives Jones only the second analysis and hide the first analysis, the manager may recommend approval to the board of directors. David’s decision will have different on each stakeholder, which the stakeholder analysis table below shows: ------------------------------------------------------------------------------------ Decision

Analysis 1 Analysis 2 Stakeholders
Company ++ - Managers - ++ Environment - +
The analysis table shows the effects on each stakeholder if David decides to tell Jones about both analyses. When David presents both analyses to Jones, David believes Jones will not support the project. Managers in company would be the only one to benefit from David’s decision. Managers will have no affect by the return on investment. However, the chemical company would keep paying a hazardous waste disposal company to dispose of waste solvent in a landfill site that it is harmful...
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