Complete Problem 1663 and submit to instructor 1663 Ethics a

Complete Problem 16-63 and submit to instructor.

16-63. Ethics and Standard Costs

Farmer Frank’s produces items from local farm products and distributes them to supermarkets. Over the years, price competition has become increasingly important, so Susan Kramer, the company’s controller, is planning to implement a standard cost system for Farmer Frank’s. She asked her cost accountant, Margaret Chang, to gather cost information on the production of blueberry preserves (Farmer Frank’s most popular product). Margaret reported that blueberries cost $0.75 per quart, the price she intends to pay to her good friend who has been operating a blueberry farm that has been unprofitable for the last few years. Because of an oversupply in the market, the price for blueberries has dropped to $0.60 per quart. Margaret is sure that the $0.75 price will be enough to pull her friend’s farm out of the red and into the black.

Required

Is Margaret’s behavior regarding the cost information she provided to Susan unethical? Explain your answer.

Solution

Yes, Margaret\'s who is cost accountant of the firm should not act this way. Her behavior regarding the cost information she provided to Susan is unethical.She should give the correct price to Susan i.e $0.60 per quart. She is trying to help her friend but at the detriment of Farmer Frank’s whch is unethical as she is working for company and getting paid by company not by her friend. She can help her friend but should be in an ethical way.