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Ethics Quality

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rebekah mahabir
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29 views1 page

Ethics Quality

.....

Uploaded by

rebekah mahabir
Copyright
© © All Rights Reserved
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neyiniee anys oe [017-4] 17-47 Ethics Keystone Electronics Corporation (KEO) is an eight-year-old company that has devel coped a process fo produce highly reliable electronic componeats at a cost well below the estab- lished competition In seeking to expand its overall components business KEC decided to eater the facsimile equipment business as there was a niche for lower-priced facsimile machines in vigorously growing marketplace, The market KEC pursued consisted of secall regional busi nesses not yet approached by the larger vendors. REC sells its machines with a one-year wet. ranty and has established a maintenance force to handle machine breakdowas, ‘As KEC customers learned of the benefits of fax transmissions, some increased their usage 1 significantly. After six months, large-volume users began experiencing breakdowns, and the 22 field techsicians’ portable test equipment was not sophisticated ecough to datect hairline breaks in the electronic ctcuitry caused by the heavierthar-expected usage. Consequently, field technicians were required to replace the damaged components and return the defective { ones to the company for further test - ‘This situation caused an increase in maintenance costs, which added tothe cost ofthe prod uct, Unfortunatsly, there was no way to determine how many of the businesses would become ‘beavy users and be subject to breakdowns, Some of the heavier-volume users began switching <2 to the more expensive machines available from the larger competitors Altzough new seles = # orders masked the oss of heavier-volume customers, the increased maintenance costs had an, 53 unfavorable impact on earnings Inher recent report prepared forthe quately meeting of the board of directors, Mary Stein, KEC's assistant controller, summarized this situation and its» 235 anticipated effect on earnings. . Jim March, vice president of manufacturing, i conceaed thatthe report doesnot provide any solutions to the problem. He asked Maria Sarche, the controller, to have the matter = deferred so that his engineering staff could work on the problem, He believes that the electronic. ‘components can be redesigned. This redesigned model, while more costly, could be an appro priate solution forthe heavier-volume user, who should not expect a low-cost model to serve ‘heir anticipated needs. March expects thatthe board may decide to disconticus the product Sine if no immediate solitioa ig available, and the company could miss a potentially profitable opportunity. March further believes that the tone of the report places his organization in an. Ys rable lak, cana he eae cad Si iat her fie and axed bef to supe he pat ofthe = eal report led othe compooent ure Sanchez Stein oust cover itor a eres ting that engineering is working with marketing on the sation to reach stsiacioy ss, tion” Stein fels strongly that the board wil be aisinformed ebout a potentially scious imp fon earningsif she follows the advice of Sanchez. Reqoirad 1, Refer to the IMA’ Statement of P ql request ftom Maria Sanchez to Mary Stein is unethical part of Sanchez that result in an unethical situation, 2, Téentify steps that Mary Stein should follow to resolve the situation, (CMA Adapted) i ia why the ial Professional Practice (unwwsimanet org) Explain why ean te both actions and nonactions on the

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