CHAPTER 6
Process Costing
COLLABORATIVE LEARNING EXERCISE SOLUTION
1. Keri’s proposal requires Stoney to falsify the equivalent units calculation so that income and
assets can be inflated and reported incorrectly. Falsification of the production report would
be a violation of at least two major ethical standards: that of integrity and that of objectivity.
Falsification does not allow the organization to attain its legitimate and ethical objectives.
Moreover, should Stoney agree to the proposal, he would be taking action that would dis-
2. Stoney has an obligation to report Keri to a superior only if an actual ethical problem exists.
If Keri decides that the course of actions she is suggesting is not really in her or the compa-
ny’s best interests, then no ethical problem exists, and no action by Stoney is needed.
3. Should Keri insist on falsifying the division’s reports, Stoney should attempt to resolve the
conflict by appealing to Keri’s immediate supervisor (and on up the ladder, if necessary, un-
til a satisfactory resolution is achieved). If no satisfactory resolution is possible, then Stoney
should resign and submit an informative memo to a representative of the organization.
4. In this situation, the ethical dilemma is complicated by two factors: Stoney’s age and a low
likelihood of resolution by appealing to higher level authorities. Stoney’s age may make it
more difficult to find alternative employment (at least at the same level and pay), and it may
mean possible forfeiture of retirement benefits. Many students will likely respond that Ston-