Assignment: Ethics Case of Managerial Accounting
Edward Saylor is the president of Ramon Company, a company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Saylor had predicted that the company's earnings would grow by 20% by this year. Unfortunately, sales have been less than expected for the year, and Saylor concluded within two weeks of the end of the fiscal year that it would be impossible to ultimately report an increase in earnings as large as predicted unless some drastic action was taken. Accordingly, Saylor has ordered that wherever possible, expenditure should be postponed to the new ear ---¬including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Additionally, Saylor ordered the company's controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventories at the end of the year.
Required:
1. Why would reclassifying period costs as product costs increase this period's reported earnings?
2. Do you believe Saylor's actions, such as postponing and canceling expenditures, are ethical? Why or why not? Cite the ethical standards (such as competence, integrity, credibility and confidentiality) to support your opinion.
3. Do you believe Saylor's action, such as reclassifying period costs as product costs, are ethical? Why or why not? Cite the ethical standards (such as competence, integrity, credibility and confidentiality) to support your opinion.
4. If you were the company's controller, what would you do?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.