Ethics Case

NATIONAL UNIVERSITY OF IRELAND, DUBLIN

UNIVERSITY COLLEGE DUBLIN

ETHICS ISSUE OF CASE: COLUMBUS PARK-WASTE TREATMENT FACILITY

Class: BSC 16(F) A

Module title: Management Accounting

Essay title: Pre course assignment

Lecturers: Jane Cao

Student Number and Name:

11207370 Li Guangxue

Word count: 898 words

Introduction

In this case, Ann Paxton, as the manager of the waste treatment facility for the city of Columbus Park, Illinois, was thinking to increase the expense budget of next year. In her idea, the city controller might not approve the total budget she submitted and other expenses could incur. Moreover, Ann wanted to earn any chance for a promotion to other department, by keep the total expenses within the budget.

Data Analysis

Firstly, the cost information must be analysed in order to understand Ann's plan.

9,000,000 gallons of waste would be required to be processed in the next year. Unit variable costs are about $0.20, total fixed costs are about $1,400,000. Ann wanted to submit a budget of around $3.9 million. Situations that would affect the budget are 10% reduce by the city controller, over $200,000 new labor costs and 500,000 extra wastes. Other situations may also happen.

Minimum budget Maximum budget

Units processed/gallons 9,000,000 9,500,000

Variable costs (budgeted at $0.20 per gallon) $1,800,000 $1,900,000

Fixed costs: 1,400,000 1,600,000 (+new labor costs)

Total costs 3,200,000 3,500,000

+10%reduce(/0.9) 3,888.889

As the above calculation shown, Ann's department has a minimum expense budget of $3,2million. With the additional situations, the budget would go up to about $3.9 million, same as Ann's plan.

Ethical Decision Making

To check Ann's decision ethical or not, there is a Seven-Question Framework for Ethical Decision Making that can be used (Jiambalvo, 2010, p18).

When evaluation a decision, ask:

1. What decision alternatives are available?

Ann wanted to submit the budget of