Friday
September 19, 2014

Homework Help: Managerial Accounting

Posted by raja on Thursday, November 11, 2010 at 10:07pm.

M.K. Gallant is president of Kranbrack Corporation, a company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company’s earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Gallant concluded with two weeks of the end of the fiscal year that it would impossible to ultimately report an increase in earning as large as predicted unless some drastic action was taken. Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the new year – including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-the-year advertising and travel. Additionally, Gallant ordered the company’s controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventories of work in process and finished goods at the end of the year. Comment on the following questions.

* Why would reclassifying period costs as product costs increase this period’s reported earnings?
* Do you believe Gallant’s actions are ethical? Why or why not?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Ethics - M.K. Gallant is president of Kranbrack Corporation, a company whose ...
Ethics in Accounting - M.K. Gallant is president of Kranbrack Corporation, a ...
Accounting - On July 1, 2011, ABC Grocers, Inc. purchased an investment in the 5...
Accounting - Greenwood Corporation has paid 60 consecutive quarterly cash ...
accounting - You have been asked to prepare a presentation for the next board of...
Accounting - Kathryn, an individual, own all of the outstanding stock in Copper ...
accounting - Ziegler Corporation purchased 25,000 shares of common stock of the ...
investment - publicly-owned stock that is not listed on an exchange is traded in...
Finance - Assume a stock has just paid a $2.00-per-share dividend. Analysts ...
accounting - How do write this as a journal entry transaction? Alex transferred...

Search
Members