Managerial Accounting

You practiced with various ethical issues in your discussion, and now you will put some of your analytical skills to work. Read the Ethics Case study CT1.5, involving classification of costs in an ethical manner, and then address the checklist items.

Scenario: Steve Morgan, controller for Newton Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him: advertising. During the year, the company had instituted an expensive advertising campaign to sell some of its slower-moving products. It was still too early to tell if the advertising campaign was successful.

There had been much internal debate as to how to report the advertising cost. The VP of Finance argued that advertising costs should be reported as a cost of production, just like direct materials and direct labor. He therefore recommended that this cost be identified as manufacturing overhead and reported as part of inventory costs until sold. Others disagreed. Morgan believed that this cost should be reported as an expense of the current period, so as not to overstate net income. Others argued that it should be reported as prepaid advertising and reported as a current asset.

The president finally had to decide the issue. He argued that these costs should be reported as inventory. His arguments were practical ones. He noted that the company was experiencing financial difficulty and expensing this amount in the current period might jeopardize a planned bond offering. Also, by reporting the advertising costs as inventory rather than as prepaid advertising, less attention would be directed to it by the financial community.

Use the Internet, Purdue Global Library resources, and your textbook to discuss this ethical case.

In a 2- to 3-page paper, please respond to the following:

What are the ethical issues involved in this situation?
What is the correct way that advertising costs should be classified?
Identify the stakeholders in this scenario and discuss what you would do if you were Steve Morgan.

Managerial Accounting

Managerial accountants must perform their work objectively and ethically. Learning to question, analyze, and objectively look at data and evidence is a decided necessity for the professional in this field.

Topic: Ethics

Please read the case below (Ethics Case CT7.5) and respond to the questions that follow:

Blake Romney became Chief Executive Officer of Peters Inc. two years ago. At the time, the company was reporting lagging profits, and Blake was brought in to “stir things up.” The company has three divisions: electronics, fiber optics, and plumbing supplies. Blake has no interest in plumbing supplies, and one of the first things he did was to put pressure on his accountants to reallocate some of the company’s fixed costs away from the other two divisions to the plumbing division. This had the effect of causing the plumbing division to report losses during the last two years; in the past it had always reported low, but acceptable, net income. Blake felt that this reallocation would shine a favorable light on him in front of the board of directors because it meant that the electronics and fiber optics divisions would look like they were improving. Given that these are “businesses of the future,” he believed that the stock market would react favorably to these increases, while not penalizing the poor results of the plumbing division. Without this shift in the allocation of the fixed costs, the profits of the electronics and fiber optics divisions would not have improved. Now the board of directors has suggested that the plumbing division be closed because it is reporting losses. This would mean that nearly 500 employees, many of whom have worked for Peters their whole lives, would lose their jobs.

How can cost allocation methods of fixed costs affect the profitability/unprofitability of a product or division?
Was Blake’s request to his accountants ethical? Why or why not?
What would be the consequences to the future profitability of the remaining divisions if the plumbing division were eliminated?
How would you explain this to Blake?

Managerial Accounting

In your role working as a paralegal or legal assistant for eHarbour, draft a memorandum to Daniel Hudson, the eHarbour general counsel, on how best to protect eHarbour’s intellectual property. Specifically, discuss the steps and benefits of safeguarding eHarbour’s intellectual property through: (1) registration of proprietary software developed by eHarbour with the U.S. Copyright Office; (2) applying for a registered trademark for the eHarbour name with the U.S. Patent and Trademark Office; and (3) protecting trade secrets with password protection and software encryption.

Use the memorandum template

Managerial Accounting

In a 1- to 2-page informative essay, please respond to the following questions:

How will accounting skills influence your role as a manager of an organization? Relate these accounting skills to the three primary management functions.
Discuss the following managerial accounting concepts: Distinguish between product costs and period costs and provide examples of each type. Also, explain each of the three types of manufacturing costs.
Assignment Submission Requirements

Viewpoint and purpose should be clearly established and sustained by providing specific examples to support your assertions.
Use correct grammar, punctuation, and spelling.
Writing should be well ordered, logical, and unified, as well as original and insightful.
Written response must follow the following formatting guidelines:

Microsoft® Word® document
Title page
Double-spacing, 12-point Times New Roman or Arial font, 1-inch margins
APA in-text citations (See Unit 2 Reading area for APA assistance.)
APA reference page of at least two references
Title page and reference page
Page length requirements: 1–2 pages, not counting title page and reference page

Managerial Accounting

First: Research the accounting code of conduct requirements on the internet following the Institute of Management Accountants (IMA) guidelines. Make sure to cite at least one source from those provided and reference them (in your separate reference page).

Second: Note how the IMA code of conduct requirements of (1) competence, (2) confidentiality, (3) integrity, and (4) credibility apply to this scenario.

Third: Then review the tutorial located in the “Ethical Approaches” presentation provided.

Fourth: Address the following checklist questions in a 2- to 3-page APA formatted original essay with an additional title and reference page to the Dropbox.


Read the textbook scenario (Ethics Case, p. 18–51) and address the checklist questions located below:

René Kelly, president of RL Industries, wishes to issue a press release to bolster his company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other operating statistics for RL Industries’ first quarter financials and operations.

Two days after you provide the data requested, Erin Lourdes, the public relations director of RL, asks you to prove the accuracy of the financial and operating data contained in the press release written by the president and edited by Erin. In the news release, the president highlights the sales increase of 25% over last year’s first quarter and the positive change in the current ratio from 1.5:1 last year to 3:1 this year. She also emphasizes that production was up 50% over the prior year’s first quarter.

You note that the press release contains only positive or improved ratios and none of the negative or deteriorated ratios. For instance, no mention is made that the debt to assets ratio has increased from 35% to 55%, that inventories are up 89%, and that although the current ratio improved, the accounts receivable turnover fell from 12 to 9. Nor is there any mention that the quarter’s reported profit would have been a loss had not the estimated lives of RL plant and machinery been increased by 30%. Erin emphasized, “The press wants this release by early this afternoon” (Weygandt et al. 2021, p. 18–51).


(1) Who are the stakeholders in this situation?

(2) Apply two or more accounting codes of conduct to answer the following questions:

Is there anything unethical in President Kelley’s actions?
Should you as controller remain silent? Does Erin have any responsibility?
(3) Then compare your response regarding the accounting code of conduct questions above to the tutorial’s ethical approaches.

Which accounting code of conduct responses to questions “a” and “b” above would be supported by two of the ethical approaches in the tutorial? Explain.

Managerial Accounting

In your own words, answer this discussion questions  (recommended minimum 300 words)

When making the determination of whether or not a selling price should be increased there are many different aspects to take into consideration. Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.

Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision. In a response of 400-600 words answer the following:

  1. What cost-volume relationships should Paulsen take into consideration for the original price and the proposed new selling price?
  2. Discuss the non-monetary factors that should be taken into consideration before raising a selling price.