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Madison Electric Pump Corp Case Solution

Solution Id Length Case Author Case Publisher
1541 323 Words (3 Pages)
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So to save himself, he is asking the controller to maneuver and distort the numbers to keep the president away from the reality. This is wrong from the perspectives of ethics and morals as it is resulting in the conflict of interest that can hit the company in the long run.

Following questions are answered in this case study solution

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

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

  3. What are Jackson’s ethical obligations? To the president? To her friend?

Case Analysis for 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.

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