Madison Electric Pump Corp Case Solution

1. Is the controller, Erin Jackson, acting ethically?

By highlighting the problems with the traditional volume-based product costing system, Jackson had acted ethically. The company’s traditional method of product costing was causing the understatement of cost which means the company was overstating the profit potential. By informing the president about the wrong practices related to the costing of the three products; she has done a morally right task. On the top of that, she also designed the activity based costing for the company.

2. Is the production manager, Alan Tyler, acting ethically?

Allan Tyler, the production manager who is also responsible for the traditional costing method employed by the company, is not behaving ethically. The president might discontinue the advanced model if he is informed about the cost of the activity based model. Moreover, Tyler’s job is also at stake as he was the manager who was responsible for the traditional costing.