VP of Mary Land Production Facility Plan to Breach Capital Expenditure Freeze - Essay Sample

Introduction

The vice president of Mary Land Production Facility, together with the plant controller, is scheduling to buy additional equipment, even though there is a freeze on capital expenses that exceed 500,000 dollars. This idea is unethical as it will affect various processes of the company. The critical ethical conflict, in this case, is that the vice president devised the plan to spend above the freeze on capital expenditure. The plan is an indicator that he is going against the decision of the CEO who set the freeze in for reasons of the betterment of the company. The second ethical conflict is that if the system comes in pieces, it may not have the concomitant warranties with tools, and this adds more risk to the business. The other issue is that the assumptions made by the controller and Spencer could be wrong. In the business world, anything is possible, and it does not matter what they think could be the benefits to the shareholders (Davies, 2016). Hence, these individuals should not evade policy to yield the outcome they desire. Lastly, the controller and Spencer are not behaving ethically, since they are purposely violating the administration of the CEO, who is responsible for maximizing the value of the business. The reason is that the CEO may have a clue of other factors that have an impact on the value of the company, and why it may not be viable to make such purchases.

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Jiambalvo Case 11-1 Response

Just-In-Time is an inventory strategy that is used by businesses to enhance efficiency and reduce wastage by receipt goods only as they are necessary for the production process, and this minimizes inventory costs. From the reading, the circuit department has an inducement to produce more since their actual hours are constant. Besides, the workers have to work for specific hours, as their salary depends on employees being there producing items that took 12.5 hours and now they produce them at 10.4 hours. Hence, the employees will run out of work if they stop producing, even if it breaks the model (Jiambalvo, 2012). In the case of the department, this will result in a bottleneck. It is important to note that process improvements do not always result in cost savings. Overheads are adding expenses, and the amount of output produced not only increases profits, but it also results in the bottleneck effect. Production will be in excess, and there will be inadequate storage for the increased output.

Lastly, not unless the business reduces the number of staff or finds a productive use of the capacity generated through the process of improvements like the sale of equipment to additional distributors. The company will continue to reduce its overall profits way beyond the predicted quality costs.

References

Davies, P. W. (2016). Current issues in business ethics. Routledge.Jiambalvo, James (2012-10-10). Managerial Accounting, 5th Edition (Page 418). Wiley Higher Ed. Kindle Edition.