Question

Ethical Issues

Jordan moved slowly down the hall, reading back over his report as he neared Josey's office. He was pleased with his work, but he needed to ask a few clarifying questions before he went on. As he started to knock, though, he stopped cold, one hand raised. He leaned forward slightly, listening for just a moment before he moved quickly back to his office, deeply troubled.

He had clearly heard Jeremiah and Josey arguing through the door about the new ABC system. Josey was completely against the waste of resources, especially the time she would have to spend making sure that it was done correctly. Jeremiah had sounded defensive in his insistence. If he lost...

Jordan shut his door and sat down at his desk. The company had hired Li specifically to help with the ABC system. If they dropped the system, they would have to let her go, and that was very depressing. He enjoyed working with Li. She was a great colleague who worked extremely hard and did excellent work.

He paused again. Would they really let Li go? The company was family-owned and operated, but they were still trying to diversify their employee base. He only had about six months seniority, not really enough to be sure that they would keep him if they downsized the department. With political pressures, the company might choose to downsize him instead.

He tried to push his worries away and get back to work, but he couldn't. The possibility that he might lose Li as a colleague had been troubling; the possibility that he might lose his own job in this economy was far more than troubling. He was now downright scared.

Questions

1. Based on your opinion of ABC costing, do you think that Jordan's fear that the company will drop the ABC system is justified? Defend your answer.

2. If the company does choose to downsize the accounting department, do you think that gender and/or ethnicity will play a part in the decision of who will be let go? Should these factors be considered? Why or why not?

3. Should Jordan discuss his fears with Li? With Josey? What should Jordan do in this situation?

Answer 1

1) ABC costing refers to Activity Based Costing. This method divides the whole process of deriving cost of a product based on activity-wise allocation of cost. For making activity-wise cost allocation entity identifies each activities cost activity driver. Then costs are allocated to the individual product or service based on number of cost activity drivers consumed by that particular product or service.

This method best describes the allocation of costs and helps in identifying proper costs of products. This is one of the finest methods used in deriving cost in cost accounting system. Rather it helps to identify the wastage of resources or efficient use of resources. This system shall not be dropped if the company really wants to improve its performance and achieve best results in true sense.

Hence, Jordan's fear seems to be a little biased. He shall not fear, in my opinion, company will not drop the ABC system.

2) If the company thinks of downsizing its accounting department, gender or ethnicity shall not play any roll in it. Downsizing is always done to make non profitable operations profitable. Hence, while down sizing it shall be considered which employees are not giving value for money i.e. their performance is below par. Instead of cutting employees based on gender, employees shall be cut based on lower performance.

3) Jordan shall, of course, discuss his fears with Li and Josey. First of all Jordan shall try to convince Josey how the productivity increases when Jordan and Li work together. How it helps the organisation to achieve its desired results. If even after giving convincing thoughts it is considered necessary to downsize and fire one of two employees Jordan shall convince that both shall be given equal opportunity to present their sides and decision shall be taken in fully unbiased manner with ethical treatment.