a.

Materials 3,000
Accounts Payable 3,000
b. Work in Process 1,700
Materials 1,700
c. Work in Process 1,200
Wages Payable 1,200
d. Work in Process 1,125
Overhead Control 1,125
e. Overhead Control 1,230
Cash 1,230
 Job #443 Job #444
Direct materials $ 500 Direct materials $1,200
Direct labor 400 Direct labor 800
Applied overhead 375 Applied overhead 750
Total $1,275 Total $2,750

f. Finished Goods 1,275

Work in Process 1,275
g. Cost of Goods Sold 2,000
Finished Goods 2,000
Accounts Receivable 2,500
Sales Revenue 2,500
 Kearney Company
Statement of Cost of Goods Manufactured
For the Month Ended April 30
Direct materials:
Beginning materials inventory $1,400
Purchases of materials 3,000
Total materials available $4,400
Ending materials 2,700
Materials used $1,700
Direct labor 1,200
Overhead $1,230
Less: Underapplied overhead 105
Overhead applied 1,125
Current manufacturing costs $4,025
Add: Beginning work in process 0
Total manufacturing costs $4,025
Less: Ending work in process 2,750
Cost of goods manufactured $1,275
 MANAGERIAL
DECISION CASE
Should Donna agree to Garys proposal? Why or why not? To
assist in deciding, review the standards in the Statement of
Ethical Professional Practice for management accountants
described in Chapter 1. Do any apply?
Garys proposal requires Donna to alter the equivalent
unit calculation so that income and assets will be
increased and reported incorrectly. Alteration of the
production report would be a violation of at least two
major ethical standards: integrity and objectivity.
Alteration does not allow the organization to attain its
legitimate and ethical objectives. Moreover, if Donna
agrees to the proposal, she would be taking action that
would dishonor her profession. Finally, Donna has an
ethical obligation to communicate information fairly and
objectively, disclosing all information that would be
needed for the loan officer to fairly assess the merits of
the companys request for a loan.
Donna should not agree to alter the production report.
Assume that Donna refuses to cooperate
and that Gary accepts this decision and
drops the matter. Does Donna have any
obligation to report the divisional
managers behavior to a superior? Explain.
Donna has an obligation to report Gary to a
superior if and only if an actual ethical
problem exists. If Gary decides that the
course of action he is suggesting is not
really in his or the companys best
interests, then no ethical problem exists,
and Donna would not need to take action.
Assume that Donna refuses to cooperate;
however, Gary insists that the changes be
made. Now what should she do? What
would you do?
If Gary insists on his idea of alteration of
the reports, Donna should try to resolve the
conflict by consulting Garys immediate
supervisor. If no satisfactory resolution is
possible, then Donna should resign and
submit an informative memo to a
representative of the organization.
 Suppose that Donna is age 63 and that
the prospects for employment elsewhere
are bleak. Assume again that Gary insists
that the changes be made. Donna also
knows that Garys supervisor, the owner of
the company, is his father-in-law.
Under these circumstances, would your
recommendations for Donna differ? If you
were Donna, what would you do?
Donnas age may make it more difficult to find alternative
employment, and it may mean giving up of retirement
benefits. Many people will likely respond that Donna
should still resign, recommending the ideal outcome. While
Donna resigning is the right choice and if resolution fails,
people should realize that ethical behavior may often carry
with it some very significant personal sacrifices however, it
is possible that the costs of unethical behavior are even
greater. Another possibility is for Donna to see a lawyer.
She has the choice whether to fight back or not.