Question

Parker's Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added at the end of the process to create the various models that are sold. The basic design and floor plans of all the houses are identical, however.

During the most recent month, the lumber used in trimming the houses was inadvertently recorded as direct materials. At month end, when the error was discovered, Susie Rief, the accountant, was told by the accounting manager, Karen Tate, not to bother with correcting the error, because the dollar amount of the error was not "worth it." Susie believes that the dollar amount is not as important as the quality of the reports. She wonders whether she would be committing an unethical act if she were to make the changes anyway, despite her superior's telling her not to.

Required:

1.   Who are the stakeholders in this situation?

2.   Was it unethical for the company to ask that the error not be corrected? Explain briefly.

3.         Would it be unethical for Susie to correct the error?  

4. What would you do in this situation?

Answer 1

1. The stakeholder's in this situation are:

Parker's Dream Homes, Inc

Susie Rief, the accountant

Karen Tate, the accounting manager

The present customers and the future customers of the company

2. No, in this case it was not unethical for the company to ask that the error not be corrected, as the error was too small in dollar amounts to be considered as direct materials or to impact costing, per se

3. It would not be unethical for Susie to either correct or leave the error as it is. That is because the dollar amount was too small to come into anyone's notice. The decision to correct it or not would depend on how easily the error could be corrected, and at what cost and how much time it would take to correct it.

4. In this situation, I would try and correct the error, under information to my superior, so that there would be fairness towards all the stakeholders