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Focus on the perspective of the Darby Company Sales Rep named Barbara. She has been directed by her boss to shift sales from year two to year one. This would make the sales in year one stronger. It would help Spencer, the marketing manager, meet his schedule for sales that supported the capital decision. What should she do and why?
CRITICAL THINKING Ethical Issue 26-1 Spencer Wilkes is the marketing manager at Darby Company, Last year, Spence mended the company approve a capital investment project for the recom predicted cash inflows f new product line. Spencer’s recommendation included pr years from the sales of the new product line. Darby Company has been selline products for almost one year. The company has a policy of conducting annual audits on capital investments, and Spencer is concerned about the one-year because sales in the first year have been lower than he estimated. However, sales been incressing for the last couple of months, and Spencer expects that by the end the second year, actual sales will exceed his estimates for the first two years combi Pos- end of Spencer wants to shift some sales from the second year of the project into first year. Doing so will make it appear that his cash flow predictions were accurae. With accurate estimates, he will be able to avoid a poor performance evaluation. Spencer has discussed his plan with a couple of key sales representatives, urging the to report sales in the current month that will not be shipped until a later month Spencer has justified this course of action by explaining that there will be no effect the annual financial statements because the project year does not coincide with the fiscal year-by the time the accounting year ends, the sales will have actually occum the
Expert Answer
Although Barbara has been directed by her boss to shift the last year sales to this year, but that would mean misrepresenting the actual sales figures that has happened over the current year even though that may eventually be converted into the sales and would help the company only. But the reality is that until converted they are not actual sales and can’t be represented in this year’s sales figures. Since that would not be ethically correct. So, what Barbara could do is prepare a report that show the actual figures and also prepare a report that would show the prospective figures that would be happening so that the project’s prospects are evaluated correctly on the basis of prospective reports.
