CHAPTER 1 THE ACCOUNTANTS ROLE IN THE ORGANIZATION See the front matter of this Solutions Manual for suggestions

regarding your choices of assignment material for each chapter. 1-1 Management accounting measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization. It focuses on internal reporting. Financial accounting focuses on reporting to external parties. It measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP). ther differences include (!) management accounting emphasizes the future" (#) management accounting influences the behavior of managers and other employees" and ($) management accounting is not restricted by Generally Accepted Accounting Principles. 1-2 %inancial accounting is constrained by generally accepted accounting principles. &anagement accounting is not restricted to these principles. 'he result is that management accounting allo(s managers to charge interest on o(ners) capital to help *udge a division)s performance" even though such a charge is not allo(ed under GAAP" management accounting can include assets or liabilities (such as +brand names, developed internally) not recognized under GAAP" and management accounting can use asset or liability measurement rules (such as present values or resale prices) not permitted under GAAP. 1-3 &anagement accountants can help to formulate strategy by providing information about the sources of competitive advantage-for example" the cost" productivity" or efficiency advantage of their company relative to competitors or the premium prices a company can charge relative to the costs of adding features that make its products or services distinctive. 1-4 'he business functions in the value chain are Research and deve !"#en$-generating and experimenting (ith ideas related to ne( products" services" or processes. %es&'n !( "r!d)c$s* serv&ces* and "r!cesses-the detailed planning and engineering of products" services" or processes. Pr!d)c$&!n-ac.uiring" coordinating" and assembling resources to produce a product or deliver a service. +ar,e$&n'-promoting and selling products or services to customers or prospective customers. %&s$r&-)$&!n-delivering products or services to customers. C)s$!#er serv&ce-providing after/sale support to customers.

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1-. Supply chain describes the flo( of goods" services" and information from the initial sources of materials and services to the delivery of products to consumers" regardless of (hether those activities occur in the same organization or in other organizations. 0ost management is most effective (hen it integrates and coordinates activities across all companies in the supply chain as (ell as across each business function in an individual company)s value chain. Attempts are made to restructure all cost areas to be more cost/effective. 1-/ +&anagement accounting deals only (ith costs., 'his statement is misleading at best" and (rong at (orst. &anagement accounting measures" analyzes" and reports financial and nonfinancial information that helps managers define the organization)s goals" and make decisions to fulfill them. &anagement accounting also analyzes revenues from products and customers in order to assess product and customer profitability. 'herefore" (hile management accounting does use cost information" it is only a part of the organization)s information recorded and analyzed by management accountants. 1-0 Management accountants can help improve quality and achieve timely product deliveries by recording and reporting an organizations current quality and timeliness levels and by analyzing and evaluating the costs and benefitsboth financial and non-financialof new quality initiatives such as TQM, relieving bottlenec constraints or providing faster customer service! 1-1 Planning decisions focus on (a) selecting organization goals" predicting results under various alternative (ays of achieving those goals" deciding ho( to attain the desired goals" and (b) communicating the goals and ho( to attain them to the entire organization. Control decisions focus on (a) taking actions that implement the planning decisions" and (b) deciding ho( to evaluate performance and (hat related feedback to provide that (ill help future decision making. 1-2 'he three roles are Pr!- e# s! v&n'-comparative analysis for decision making. Sc!re,ee"&n'-accumulating data and reporting results to management describing ho( the organization is doing and ho( (ell it is implementing its strategies. A$$en$&!n d&rec$&n'-helping managers to focus on opportunities and problems. 'he three guidelines for management accountants are !. 1mploy a cost/benefit approach. #. 2ecognize behavioral and technical considerations. $. Apply the +different costs for different purposes, notion.

1-13

1-11 Agree. A successful management accountant re.uires general business skills (such as understanding the strategy of an organization) and people skills (such as motivating other team members) as (ell as technical skills (such as computer kno(ledge" calculating costs of products" and supporting planning and control decisions).

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1-12

'he ne( controller could reply in one or more of the follo(ing (ays3 (a) 4emonstrate to the plant manager ho( he or she could make better decisions if the plant controller (as vie(ed as a resource rather than a dead(eight. In a related (ay" the plant controller could sho( ho( the plant manager)s time and resources could be saved by vie(ing the ne( plant controller as a team member. (b) 4emonstrate to the plant manager a good kno(ledge of the technical aspects of the plant. 'his approach may involve doing background reading. It certainly (ill involve spending much time on the plant floor speaking to plant personnel. (c) 5ho( the plant manager examples of the ne( plant controller)s past successes in (orking (ith line managers in other plants. 1xamples could include assistance in preparing the budget" assistance in analyzing problem situations and evaluating financial and nonfinancial aspects of different alternatives" and assistance in submitting capital budget re.uests. (d) 5eek assistance from the corporate controller to highlight to the plant manager the importance of many tasks undertaken by the ne( plant controller. 'his approach is a last resort but may be necessary in some cases.

1-13 I&A stands for the Institute of &anagement Accountants. It is the largest association of management accountants in the 6nited 5tates. 'he 0&A (0ertified &anagement Accountant) is the professional designation for management accountants and financial executives. It demonstrates that the holder has met the admission criteria and demonstrated the competency of technical kno(ledge re.uired by the I&A. 1-14 'he Institute of &anagement Accountants (I&A) sets standards of ethical conduct for management accountants in the follo(ing areas3 0ompetence 0onfidentiality Integrity b*ectivity 1-1. 5teps to take (hen established (ritten policies provide insufficient guidance are (a) 4iscuss the problem (ith the immediate superior (except (hen it appears that the superior is involved). (b) 0larify relevant ethical issues by confidential discussion (ith an ob*ective advisor. (c) 0onsult your o(n attorney as to legal obligations and rights concerning the ethical conflicts. If (a)" (b)" (c) and other avenues do not resolve the situation" resignation from the organization should be considered.

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(!7 min.) 4a )e cha&n and c ass&(&ca$&!n !( c!s$s* c!#")$er c!#"an56 C!s$ I$e# a. b. c. d. e. f. g. h. 4a )e Cha&n 7)s&ness 8)nc$&!n Production 4istribution 4esign 2esearch and 4evelopment 0ustomer 5ervice or &arketing 4esign (or 2esearch and 4evelopment) &arketing Production

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(!7 min.) 4a )e cha&n and c ass&(&ca$&!n !( c!s$s* "har#ace)$&ca c!#"an56 C!s$ I$e# a. b. c. d. e. f. g. h. 4a )e Cha&n 7)s&ness 8)nc$&!n 4esign &arketing 0ustomer 5ervice 2esearch and 4evelopment &arketing Production &arketing 4istribution

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1-18

"#$ min!%

Management accounting system and its customers.

!. &anagement accounting)s customers are managers of departments such as marketing" production and 294. &anagement accounting focuses on providing financial and nonfinancial information to the managers to help them make better decisions to achieve the organization)s goals. #. 'he value of a management accounting system can be enhanced and" simultaneously" expectations of managers can be exceeded by providing relevant and timely information to the managers so that they achieve their strategic goals and make good planning and control decisions. 'his means that management accounting must have customer focus. 'he information needs of the managers for decision making must be met and exceeded in order to retain them as users of management accounting information. &anagement accounting systems should address the information needs of the managers by helping (ith problem solving" scorekeeping" and directing their attention to the follo(ing key success factors3 0ost control :igh .uality 'imely response to customer demand Innovation

&anagement accountants have several tools that can help managers concentrate on continuous improvement of various aspects of their operations. ;alue chain and supply chain analysis performed by the management accounting function can contribute to the achievement of key success factors. <hen each business function adds value and all business functions are coordinated and (ell integrated" it contributes to cost control" high .uality" timely response" and innovation. 1-12 (!7 min.) 4a )e cha&n* s)"" 5 cha&n* and ,e5 s)ccess (ac$!rs6 Chan'e &n +ana'e#en$ Acc!)n$&n' a. b. c. d. e. 9e5 The#e ;alue/chain analysis =ey success factors (cost and .uality) =ey success factors (cost) 5upply/chain analysis =ey success factors (time)

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1-23

(!7 min.) P ann&n' and c!n$r! dec&s&!ns6

!. a. Planning->arnes 9 ?oble (>9?))s cash needs for the future. b. 0ontrol->9?)s annual financial performance evaluation. #. a. Planning-(hether to increase or decrease local marketing support. b. 0ontrol-(hether recent sales promotion led to an increase in revenues. $. a. Planning-(hether or not to expand >9?)s internet/based lines of business. b. 0ontrol-evaluation by ;P of ?e( >usiness 4evelopment of the performance of managers of individual lines of business. 8. a. Planning-(hich books to advertise more or (hich books to include in a special chat/ room site. b. 0ontrol-decision by publisher to pay additional bonuses to each author (hose book reaches the bestseller list and stays on the list for a certain period of time. 7. a. Planning-decision by >9? on the amount and type of insurance to purchase next year. b. 0ontrol-follo( up by >9? (ith the insurance company regarding a cash payment to >9?. 1-21 (!7 min.) Pr!- e# s! v&n'* sc!re,ee"&n'* and a$$en$&!n d&rec$&n'6

>ecause the accountant)s duties are often not sharply defined" some of these ans(ers might be challenged3 a. b. c. d. e. f. g. h. i. *. 5corekeeping Attention directing Problem solving Attention directing Problem solving 5corekeeping (and then attention directing) Problem solving 5corekeeping (depending on the extent of the report) or attention directing Problem solving Problem solving

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1-22

(!7 min.) Pr!- e# s! v&n'* sc!re,ee"&n'* and a$$en$&!n d&rec$&n'6

'he accountant)s duties are often not sharply defined" so some of these ans(ers might be challenged3 !. Attention directing #. Problem solving $. 5corekeeping 8. 5corekeeping 7. 5corekeeping @. Attention directing A. Problem solving B. 5corekeeping C. Problem solving !D. Attention directing 1-23 (!DE!7 min.) Pr!(ess&!na e$h&cs and re"!r$&n' d&v&s&!n "er(!r#ance6

!. &iller)s ethical responsibilities are (ell summarized in the I&A)s +5tandards of 1thical 0onduct for &anagement Accountants, (1xhibit !/A of text). Areas of ethical responsibility include the follo(ing3 competence confidentiality integrity ob*ectivity

'he ethical standards related to &iller)s current dilemma are integrity" competence and ob*ectivity. 6sing the integrity standard" &iller should communicate unfavorable as (ell as favorable information and professional *udgments or opinions. 0ompetence demands that &iller perform her professional duties in accordance (ith relevant la(s" regulations" and technical standards. b*ectivity re.uires that &iller report information fairly and ob*ectively. &iller should refuse to book the F#DD"DDD of sales until the goods are shipped. >oth financial accounting and management accounting principles maintain that sales are not complete until the title is transferred to the buyer. #. &iller should refuse to follo( &aloneyGs orders. If &aloney persists" the incident should be reported to the corporate controller. 5upport for line management should be (holehearted" but it should not re.uire unethical conduct.

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1-24 !.

(!7 min.) P ann&n' and c!n$r! dec&s&!ns* In$erne$ c!#"an56 P ann&n' dec&s&!ns a. 4ecision to raise monthly subscription fee c. 4ecision to upgrade content of online services (later decision to inform subscribers and upgrade online services is an implementation part of control) e. 4ecision to decrease monthly subscription fee C!n$r! dec&s&!ns b. 4ecision to inform existing subscribers about the rate of increase-an implementation part of control decisions d. 4ismissal of ;P of &arketing-performance evaluation and feedback aspect of control decisions

#. ther planning decisions that may be made at <eb?e(s.com3 decision to raise or lo(er advertising feesH decision to charge a fee from on/line retailers (hen customers click/through from <eb?e(s.com to the retailers) (ebsites. ther control decisions that may be made at <eb?e(s.com3 evaluating ho( customers like the ne( format for the (eather information" (orking (ith an outside vendor to redesign the (ebsite" and evaluating (hether the (aiting time for customers to access the (ebsite has been reduced.

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1-2. !.

($D min.) Pr!- e# s! v&n'* sc!re,ee"&n'* a$$en$&!n d&rec$&n'* and (eed-ac,* In$erne$ c!#"an5 :c!n$&n)a$&!n !( 1-24;6 (a) and (e) 4ecisions to change subscription fee. Problem solving-report outlining expected revenues from subscribers and advertising (ith different monthly fee amounts. Scorekeeping-report (ith monthly subscribers and their revenues in prior months. Attention directing-report sho(ing the change in the number of subscribers of Internet companies at the time they change their monthly fees. (b) 4ecision to inform existing subscribers of F#8.C7 fee from Iuly on(ards. Problem solving-report analyzing different (ays (e/mail" regular mail) of informing subscribers. Scorekeeping-report indicating ho( many subscribers have been contacted. Attention directing-report sho(ing ho( many subscribers have cancelled their subscriptions follo(ing notification of the increase in fees. (c) 4ecision to upgrade content of online services and to offer better Internet mail services. Problem solving-report outlining expected revenues from subscribers and advertisers as a result of upgrading service. Scorekeeping-report (ith monthly subscribers and revenues before and after upgrading service. Attention directing-report sho(ing the change in the number of subscribers of Internet companies after they upgraded service. (d) 4ecision to dismiss vice president of marketing. Problem solving-report indicating alternative reasons for the slo(do(n in subscribers from Iuly to 5eptember #DD@. Attention directing-report analyzing gro(th in subscribers at competing Internet companies compared to <eb?e(s.com. Scorekeeping-report sho(ing the number of subscribers after the ;ice President of &arketing (as dismissed.

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As a result of the feedback from the control system" <eb?e(s.com made the follo(ing decisions3 a. 4ecision in ctober to change subscription fee from F#8.C7 per month in 5eptember #DD@ to F#!.C7 in ?ovember #DD@. b. 4ismissal of ;ice President of &arketing after significant slo(ing of subscriber gro(th in accounts and revenues. <eb?e(s.com overestimated the number of subscribers for the Iuly to 5eptember #DD@ period. It might examine the methodology it uses to estimate the sensitivity of subscriptions to price changes and upgrade of its services.

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1-26 "&$ min!% !. #. $. 8. 7. @. A. B. C. 1-20 !.

Management accounting guidelines.

0ost/benefit approach >ehavioral and technical considerations 4ifferent costs for different purposes 0ost/benefit approach >ehavioral and technical considerations 0ost/benefit approach >ehavioral and technical considerations 4ifferent costs for different purposes >ehavioral and technical considerations (!7 min.) R! e !( c!n$r! er* r! e !( ch&e( (&nanc&a !((&cer6 Ac$&v&$5 &anaging accounts payable 0ommunicating (ith investors 5trategic revie( of different lines of businesses >udgeting funds for a plant upgrade &anaging the company)s short/term investments ?egotiating fees (ith auditors Assessing profitability of various products 1valuating the costs and benefits of a ne( product design C!n$r! er J J J J J J C8O J J

#. As 0% " Perez (ill be interacting much more (ith the senior management of the company" the board of directors" and the external financial community. Any experience he can get (ith these aspects (ill help him in his ne( role as 0% . George Perez can be better positioned for his ne( role as 0% by participating in strategy discussions (ith senior management" by preparing the external investor communications and press releases under the guidance of the current 0% " by attending courses that focus on the interaction and negotiations bet(een the various business functions and" either formally or on the *ob" getting training in issues related to investments and corporate finance.

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1-21

($D min.) S!($<are "r!c)re#en$ dec&s&!ns* e$h&cs6

!. &ichael faces an ethical problem. 'he trip appears to be a gift (hich could influence his purchase decision. 'he ethical standard of integrity re.uires &ichaels to refuse the gift. 0ompanies (ith +codes of conduct, fre.uently have a +supplier clause, that prohibits their employees from accepting +material, (in some cases" any) gifts from suppliers. 'he motivations include (a) IntegrityKconflict of interest. 5uppose &ichaels recommends that a :orizon !/#/$ product should subse.uently be purchased by %iesta. 'his recommendation could be because he felt obligated to them as his trip to the 0ancLn conference (as fully paid by :orizon. (b) 'he appearance of a conflict of interest. 1ven if the :orizon !/#/$ product is the superior one at that time" other suppliers likely (ill have a different opinion. 'hey may believe that the (ay to sell products to %iesta is via +fully/paid *unkets to resorts., 'hose not (anting to do business this (ay may do(nplay future business activities (ith %iesta even though %iesta could gain much from such activities. 5ome executives vie( the meeting as +suspect, from the start given the 0aribbean location and its +rest and recreation, tone. #. %iesta should not allo( executives to attend user meetings (hile negotiating (ith other vendors about a purchase decision. 'he payment of expenses for the trip constitutes a gift that could appear to influence their purchase decision. Pr!s !( a$$end&n' )ser #ee$&n' (a) pportunity to learn more about :orizon)s soft(are products. (b) pportunity to interact (ith other possible purchasers and get their opinions. (c) pportunity to influence the future product development plans of :orizon in a (ay that (ill benefit %iesta. An example is :orizon subse.uently developing soft(are modules tailored to food product companies. (d) 5aves %iesta money. ;isiting suppliers and their customers typically cost money" (hereas :orizon is paying for the 0ancLn conference. C!ns !( A$$end&n' (a) 'he ethical issues raised in re.uirement !. (b) ?egative morale effects on other %iesta employees (ho do not get to attend the 0ancLn conference. 'hese employees may reduce their trust and respect for &ichaels)s *udgment" arguing he has been on a +supplier/paid vacation., C!nd&$&!ns !n A$$end&n' $ha$ 8&es$a +&'h$ I#"!se (a) 5izable part of that time in 0ancLn has to be devoted to business rather than recreation. (b) 4ecision on (hich %iesta executive attends is not made by the person (ho attends (this reduces the appearance of a conflict of interest). (c) Person attending (&ichaels) does not have final say on purchase decision (this reduces the appearance of a conflict of interest). (d) %iesta executives go only (hen a ne( ma*or purchase is being contemplated (to avoid the conference becoming a regular +vacation,). !/!!

A 0onference >oard publication on Corporate Ethics asked executives about a comparable situation. %ollo(ing are the results3 A@M said %iesta and &ichaels face an ethical consideration in deciding (hether to attend. A!M said &ichaels should not attend" as the payment of expenses is a +gift, (ithin the meaning of a credible corporate ethics policy. $. 'he company does not need its o(n code of ethics. 'hey can use the code of ethics developed by the I&A. Pr!s !( hav&n' a <r&$$en c!de 'he 0onference >oard outlines the follo(ing reasons (hy companies adopt codes of ethics3 (a) (b) (c) (d) 5ignals commitment of senior management to ethics. Promotes public trust in the credibility of the company and its employees. 5ignals the managerial professionalism of its employees. Provides guidance to employees as to ho( difficult problems are to be handled. If adhered to" employees (ill avoid many actions that are unethical or appear to be unethical. (e) 4rafting of the policy (and its redrafting in the light of ambiguities) can assist management in anticipating and preparing for ethical issues not yet encountered. C!ns !( hav&n' a <r&$$en c!de (a) 0an give appearance that all issues have been covered. Issues not covered may appear to be +acceptable, even (hen they are not. (b) 0an constrain the entrepreneurial activities of employees. %orces people to al(ays +behave by the book., (c) 0ost of developing code can be +high, if it consumes a lot of employee time. 1-22 ($DE8D min.) Pr!(ess&!na e$h&cs and end-!(-5ear ac$&!ns6

!. 'he possible motivations for the snack foods division (anting to take end/of/year actions include3 (a) &anagement incentives. Gourmet %oods may have a division bonus scheme based on one/year reported division earnings. 1fforts to front/end revenue into the current year or transfer costs into the next year can increase this bonus. (b) Promotion opportunities and *ob security. 'op management of Gourmet %oods likely (ill vie( those division managers that deliver high reported earnings gro(th rates as being the best prospects for promotion. 4ivision managers (ho deliver +un(elcome surprises, may be vie(ed as less capable. (c) 2etain division autonomy. If top management of Gourmet %oods adopts a +management by exception, approach" divisions that report sharp reductions in their earnings gro(th rates may attract a sizable increase in top management supervision.

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'he +5tandards of 1thical 0onduct . . . , re.uire management accountants to 2efrain from either actively or passively subverting the attainment of the organization)s legitimate and ethical ob*ectives" and 0ommunicate unfavorable as (ell as favorable information and professional *udgment or opinions.

5everal of the +end/of/year actions, clearly are in conflict (ith these re.uirements and should be vie(ed as unacceptable by 'aylor. (b) 'he fiscal year/end should be closed on midnight of 4ecember $!. +1xtending, the close falsely reports next year)s sales as this year)s sales. (c) Altering shipping dates is falsification of the accounting reports. (f) Advertisements run in 4ecember should be charged to the current year. 'he advertising agency is facilitating falsification of the accounting records. 'he other +end/of/year actions, occur in many organizations and may fall into the +gray, to +acceptable, area. :o(ever" much depends on the circumstances surrounding each one" such as the follo(ing3 (a) If the independent contractor does not do maintenance (ork in 4ecember" there is no transaction regarding maintenance to record. 'he responsibility for ensuring that packaging e.uipment is (ell maintained is that of the plant manager. 'he division controller probably can do little more than observe the absence of a 4ecember maintenance charge. (d) In many organizations" sales are heavily concentrated in the final (eeks of the fiscal year/end. If the double bonus is approved by the division marketing manager" the division controller can do little more than observe the extra bonus paid in 4ecember. (e) If '; spots are reduced in 4ecember" the advertising cost in 4ecember (ill be reduced. 'here is no record falsification here. (g) &uch depends on the means of +persuading, carriers to accept the merchandise. %or example" if an under/the/table payment is involved" it is clearly unethical. If" ho(ever" the carrier receives no extra consideration and (illingly agrees to accept the assignment" the transaction appears ethical. 1ach of the (a)" (d)" (e)" and (g) +end/of/year actions, may (ell disadvantage Gourmet %oods in the long run. %or example" lack of routine maintenance may lead to subse.uent e.uipment failure. 'he divisional controller is (ell advised to raise such issues in meetings (ith the division president. :o(ever" if Gourmet %oods has a rigid set of lineKstaff distinctions" the division president is the one (ho bears primary responsibility for *ustifying division actions to senior corporate officers. $. If 'aylor believes that 2yan (ants her to engage in unethical behavior" she should first directly raise her concerns (ith 2yan. If 2yan is un(illing to change his re.uest" 'aylor should discuss her concerns (ith the 0orporate 0ontroller of Gourmet %oods. 'aylor also may (ell ask for a transfer from the snack foods division if she perceives 2yan is un(illing to listen to pressure brought by the 0orporate 0ontroller" 0% " or even President of Gourmet %oods. In the extreme" she may (ant to resign if the corporate culture of Gourmet %oods is to re(ard division managers (ho take +end/of/year actions, that 'aylor vie(s as unethical and possibly illegal. It

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(as precisely actions such as (b)" (c)" and (f) that caused >etty ;inson" an accountant at <orld0om to be indicted for falsifying <orld0om)s books and misleading investors.

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1-33

(8D min.) G !-a c!#"an5* e$h&ca cha en'es <&$h -r&-er56

!. It is clear that bribes are illegal according to 6.5. la(s. It is not clear from the case (hether bribes are illegal in ;artan. :o(ever" kno(ledgeable people in global business (ould attest to the fact that it is virtually impossible to find any country in the (orld that specifically sanctions bribery. 'he ma*or point" ho(ever" that deserves discussion is3 5hould Nen'el engage in any unethical activities even if they are not illegalO It is difficult to make a generalization about all shareholders of the company. It is" ho(ever" safe to assume that not all shareholders (ould (ant to keep their investment in a company that is engaged in unethical andKor illegal activities. 'here is historical evidence to substantiate this point3 <hen apartheid la(s (ere in effect in 5outh Africa" many investors divested shares of companies doing business in 5outh Africa. Apart from the ethical issues" it should also be noted that bribery can be very costly in some parts of the (orld. >ribes may not generate revenues sufficient enough to offset their cost. #. Apparently :ank thinks that local culture and common practice are one and the same. 'his" in fact" is not the case. 'here are many common practices in developing countries" (hich are against the native culture. 5pecifically" bribery often leads to decisions that are not made on the basis of the merits of the alternative selected. 'his results in misallocation of meager resources of the developing country. &isallocation of resources has adverse effects on the economy of a country and the living standard of its population. 'he negative impact is intensified in developing countries because they can least afford the misallocation of resources. As it applies to local common practice" multinational companies make some small allo(ances but dra( a hard line against paying the F! million +commission., $. Nen'el might have an articulated corporate policy against such payments to get the message across that regardless of la(s" the top management (ould not tolerate any bribery payments made by its employees. A strong and consistent message from the top often has a noticeable effect on the corporate culture and employee behavior. 6.5. la(s specifically prohibit bribery payments. 5uch payments can result in heavy penalties to the corporation making the payments. 8. If this contract is of great importance to Nen'el)s global strategy" it is likely that this kind of issue (ill come up again as Nen'el expands into very diverse cultures and the company should tackle it head on and make a policy decision against offering bribes. 5teve 0heng should discuss the situation (ith the top management at Nen'el and re/affirm his goal to get the ;artan contract (ith legal means. :e could seek the help of the 6.5. commercial attachP in ;artan to continue a dialogue (ith ;artan)s deputy minister of communications. :e could propose other creative" legal changes to the Nen'el)s bid" even at the cost of reducing the profitability of the current pro*ect. 0oncessions such as training programs" schools and other public (orks pro*ects may be legal" get the attention of the ;artan government and raise Nen'el)s profile both at home and abroad. In the (orst case" if the ;artan government does not agree to any of the creative" legal +extras, that Nen'el can provide in order to (in the contract" 0heng should report this to Nen'el)s management and be (illing to (alk a(ay from the ;artan pro*ect.

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Cha"$er 1 4&de! Case he video case can be discussed using only the case !riteup in the chapter. Alternatively" instructors can have students vie! the videotape of the company that is the sub#ect of the case. he videotape can be obtained by contacting your Prentice $all representative. he case %uestions challenge students to apply the concepts learned in the chapter to a specific business situation. REGAL +ARINE= The Acc!)n$an$s R! e !.a. Preparing a schedule of depreciation for boat hull and deck molds-5corekeeping. b. Analyzing the desirability of using standard ;olvo/Penta boat engines in a ne( boat model -Problem solving. c. Preparing the daily report of the number of hull defects found during the .uality check on the 5port >oat assembly line-Attention directing and scorekeeping. d. 1xplaining the 0ommodore Qacht 4ivision)s monthly performance report-Attention directing. e. Interpreting differences bet(een actual results and budgeted amounts on the monthly performance report for the prototyping department-Attention directing. f. Preparing a monthly statement of boat sales" by model and customer" for the company)s vice president of sales-Attention directing (or 5corekeeping). g. Analyzing" for the design team" the impact on product costs for a ne( dashboard odometer display-Problem solving. h. Preparing a cost comparison of t(o ply(ood manufacturers for use by the purchasing manager-Problem solving. #.a. 0ost of a toll/free telephone line used for customer in.uiries about product specifications" performance" and (arranty coverage-0ustomer 5ervice" or if prior to purchase&arketing. b. 0ost of sales and promotional materials-&arketing. c. Rabor costs of (orkers in the 0abinetry 4epartment of the production facilityProduction. d. 0ost of an industry research report on boat industry trends-2esearch 9 4evelopment or 4esign of products or processes. e. 1.uipment and trucks purchased for transporting finished boats to retail outlets such as the >oat 'ree-4istribution. f. >oat hull and deck mold fabrication costs-Production. g. 0ost of a ne( 0A4 design station-4esign of products or processes. h. 0osts of upholstery seats for 0ommodore yachts-Production.

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