Accounting Theory.

Discuss Dynamics Engineering costing procedures. Why does overhead cost increase when direct labor hours increase?

Discuss John Smith's responsibilities in light of the IMA's statement of professional conduct.

What are his responsibilities with respect to the 4 standards of ethical conduct?

What are the steps John should take in resolution of the ethical conflict (use the IMA's resolution of ethical conduct as your guide). How would you handle the situation?"

Answer this posting below: It appears that when doing government jobs by this company billing accounts for cost plus predetermined profits.

From the reading I can only determine that this means that the more the job costs the more profit the company is to make. The reason that overhead cost increases when direct labor increases are because the cost for direct labor needs to be included in overhead costs in order to cover all costs incurred in production.

With increased labor that means you will have more cost in other areas (this can be anything from electricity used, depreciation of equipment and facilities, quality control, material handling, etc.).

Variable costs such as direct labor can fluctuate in proportion to changes in production. John Smith has a responsibility to always remain ethical in his position by being honest, fair, objective, and responsible.

He must act in accordance with these principles and encourage others within his organization to follow them as well. Failure to comply with the IMA's standards can and should result in disciplinary action. Competency, confidentiality, integrity, and credibility are standards that must be kept and demanded of by those in such a profession.

STANDARDS A member's failure to comply with the following standards may result in disciplinary action.

I. COMPETENCE Each member has a responsibility to:

1. Maintain an appropriate level of professional expertise by continually developing knowledge and skills.

2. Perform professional duties in accordance with relevant laws, regulations, and technical standards.

3. Provide decision support information and recommendations that are accurate, clear, concise, and timely.

4. Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

II. CONFIDENTIALITY Each member has a responsibility to:

1. Keep information confidential except when disclosure is authorized or legally required.

2. Inform all relevant parties regarding appropriate use of confidential information. Monitor subordinates' activities to ensure compliance.

3. Refrain from using confidential information for unethical or illegal advantage.

III. INTEGRITY Each member has a responsibility to:

1. Mitigate actual conflicts of interest; regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts.

2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically.

3. Abstain from engaging in or supporting any activity that might discredit the profession.

The steps John should take in resolution of the ethical conflict in this case would be to submit the issue to the next management level above his supervisor if he is unable to resolve the issue at that level.

John should clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counselor or other impartial advisor to obtain a better understanding of possible courses of action if need be.

If all other courses of action fail John might want to consider consulting an attorney as to legal obligations and rights concerning the ethical conflict.

I would handle this situation by first gathering more information from my supervisor. I would want to know if there was justification for the added hours and whether or not those changes were discussed with and approved by the contract if there is one.

If I was not happy with the answers to my questions to the supervisor above me I would then go up a level to who was in charge of that supervisor for a resolution to the conflict.

I would like to add here that since the course only opened up yesterday it was impossible for me to read two full chapters and be able to accurately discuss this topic in twenty four hours' time along with my other courses as well.

Hope Schabel References Statement of Ethical Professional Practice (Undated) |

CSEP : Codes Repository. (n.d.). Retrieved from http://ethics.iit.edu/ecodes/node/ Please use APA form when citing references and please provide references.