(a) Financially, the $40,000 error is not apt to significantly damage Osborn. However, this does not mean that Jim should keep the money and let the error go unreported. Jim has an ethical responsibility to make the company aware of its mistake. To do otherwise is the same as stealing.
(b) There is no easy answer to this question. One option for Sara is to inform Jim that she knows about the error in his bonus payment. She should also let him know that he has an ethical and legal obligation to return the money to the company. If he says that he will return it, she may choose to trust him. If he says that he will not return it, one may argue that she has an obligation to "blow the whistle" on Jim.
(c) It is not ethical for Jim's attorney to suggest that he keep the money. The attorney's professional code of ethics certainly does not condone stealing. Thus, the attorney should strongly suggest that Jim return the money. However, if Jim refuses to do so, the attorney may not "blow the whistle" on him because of the legal profession's legal and ethical responsibility to maintain client confidentiality.
(d) Once again, there is no correct answer to this question. However, if Jim's daughter decides to stay in Boston, she must live with the fact that her college education was subsidized with stolen money. It would certainly be advantageous for her to graduate with a degree from the prestigious university. Therefore, she should make every possible effort to obtain financial aid (work-study, student loans, grants, etc.). If her efforts fail, and Jim returns the money, she may have to finish her education in Ohio.
Management makes use of accounting information about individual responsibility centers of the business in many ways, including (1) planning and allocating resources, (2) evaluating the performance of responsibility centers, (3) controlling costs, and (4) evaluating the performance of center managers.
Responsibility accounting: Responsibility accounting is a concept that states that each cost that is incurred in the company is responsibility of some or the other person working in the company.
Costs deducted from contribution margin to determine responsibility margin are Traceable fixed costs.
Goods transferred at cost to produce plus a predetermined markup is known as cost-plus transfer price.
None. Out of the given terms, none explains the given statement.
A subtotal in a responsibility income statement which is equal to responsibility margin plus committed fixed costs is termed as performance margin.
The sub-total in a responsibility income statement that is most useful in evaluating the short-run effect of various marketing strategies on the income of the business is termed as Contribution Margin.
The subtotal in a responsibility income statement that comes closest to indicating the change in income from operations that would result from closing a particular part of the business is termed as responsibility margin.
The amount used in recording products or services supplied by one business unit to another is termed as transfer price.