Option #2: Ace Fertilizer Company: Ethical Cost Allocations and Price Determination
Read the case:
Kreuze, J. (2009, September). Ace fertilizer company: Ethical cost allocations and price determination.Links to an external site.. IMA Educational Case Journal, 2(3), ART. 3.
Case Requirements:
Prepare a paper and address the following questions:
- Did Abby compute the cost of the Breeland Ltd. special order correctly before the weekend get-together? If not, how was her cost estimate and/or price determination flawed?
- Whose assessment of the costing of this special order do you believe is correct—George Smilee’s or Abby Conroy’s? That is, should George’s conversations with Josh impact Abby’s cost estimate of the Breeland Ltd. special order? Explain your answer.
- Are there any ethical issues related to the cost determination on the Breeland Ltd. special order? If so, what issues are present? How should Abby resolve these conflicts? Should Abby go directly to Tom Brennen about this new development? How can Abby use the IMA Statement of Ethical Professional Practice as a guide for her actions?
- If Abby were to modify her original cost estimate of the Breeland Ltd. special order to include Josh’s purchase of the remaining 10 gallons of XO-1600, what price determination would she have arrived at? What impact would that have had on Ace Fertilizer’s bottom line?
Requirements:
- Write a paper of 3-4 pages in length, not counting the title and reference pages, which you must include.
- Use terms, evidence, and concepts from class readings, including professional business language.
- Cite at least three credible sources for this assignment.