People Carrier Systems, Inc. (PCS) modifies vans that seat 15–20 people by adding additional safety features or wheelchair ramps. Most of its customers are cities and counties, who use the vans to transport school children, the elderly, or the handicapped. The company has specialized in a no-frills approach, emphasizing safety, high quality, and low cost. The company's president was quoted as saying, "Let the other guys make a van pretty. We get people where they need to go—faster, better, and cheaper than anybody else." PCS obtains jobs by being the lowest bidder in a sealed bidding process. Recently, the company was solicited by a top-10 college to submit a bid for a van to be used by its athletic team. Some specialized items were required, such as the school's logo on the outside of the van, and the addition of school colors on the vinyl seats. PCS submitted a bid and won the job. As the job was being prepared, the job manager, Kathy, pointed out that several extra costs could result in the job showing a loss. Kathy’s boss, Elaine, who is an ardent fan of sports and of this team in particular, tells Kathy to just charge the standard labor and overhead cost for this specialty job, as opposed to a higher cost. To even out the cost over time, Elaine says they could keep the standard predetermined overhead rate for this specialized job, and just increase the overhead rate (used when determining the pricing submitted in bids) by 5% for future standard jobs. That way, the costs assigned to these future jobs cover specialty job costs. "After all," Elaine says, "nobody else comes close to our price anyway. This could start a whole new line of business for us." 1. Who are the direct and indirect stakeholders in this situation? Refer to the Ethics Slides to refresh your memory on who qualifies as direct and indirect stakeholders.
2. Which ethical issues are involved?
Which ethical dilemma(s) might Kathy be facing here?
3. Which top two principles of the IMA Statement of Professional Ethical Practice are involved in Kathy’s decision? Explain the reason(s) you chose these principle(s).
4. Which top three standards in the IMA Statement of Professional Ethical Practice are involved in Kathy’s decision? State the top 3 part(s) of the standard(s).
5. What are the possible alternative actions involved in Kathy’s decision?
6. In the context of this situation, what does the IMA Statement of Professional Ethical Practice suggest for resolving ethical issues?
7. What would you do in this situation and why? There is no right or wrong answer here; just answer the question honestly. Your answer should be at least five sentences.