Question

Job Costing and Ethics 7-59. Chuck Moore supervises two consulting jobs for the firm of Price and Waters, LLP, which is a consulting firm that helps organizations become more efficient. One of the consulting jobs is for the U.S. Department of Defense and the other is for General Motors, Inc. Chuck received the monthly cost reports about three weeks after month-end. The General Motors job contained bad news. After getting up his nerve, Chuck called his boss the following week to pass on the bad news. “The General Motors job is only half done, but we have already spent all of the $1 million that we expected to spend on that job,” he said. “However, we have spent only $500,000 of the $800,000 that we expected to spend on the U.S. Department of Defense job, even though we are 90 percent done with the work.” His boss told Chuck, “Assign the rest of the costs needed to complete the General Motors job to your U.S. Department of Defense job. We’re under budget on that job and we get reimbursed for costs on government jobs.” Required: What should Chuck do? Does it matter that Chuck’s consulting firm is reimbursed for costs on the government jobs? Explain. Discuss this case using the steps for analyzing an ethical dilemma: Find the facts involved in the case Find the ethical issues and stakeholders What values are questioned in this case? What are the alternatives? ( list 3) Evaluate the alternatives in terms of the values. What are the consequences of the alternatives? What is the correct course of action in this case based on your assessment above?

Answer 1

Chuck is acting as a professional and helping organizations become more efficient. In the above scenario since the job for General Motos has gone overbudget , he should tell his boss to call the client and explain to them the reasons for going over budget.Allocating US depatments defense budget to General Motors is not correct.

It does not matter whether or not Chuck's company is reimbursed for costs on government jobs or not. They should only seek reimbursement for genuine costs and act with integrity.

The ethical issue in this case is whether it is okay to betray a client's trust for personal gain. The stakeholders are the US department of defense and General motors Ic. The values questioned in this case are integrity and honesty.

The alternatives are to go ahead with the plan of diverting US departments budget to GM or to tell the client (GM) the truth. As a person of integrity, the latter option should be chosen.