Summing Up Social Responsibility (Scenario)

question 12

Multiple Choice

Summing Up Social Responsibility (Scenario)
Maher, director of research and development for National Products Company, has learned that a new material has been developed in his department that appears as though it will work in several products already being manufactured by National Products Company. He has discussed the potential savings with his two assistants, Sawsan and Mansur, and the vice president of product development, Raed. Sawsan has stated her opposition to the use of the new product because its durability and flame retardance have not completed testing and have not been certified by the company's third- party testing laboratory. Mansur argues that the initial tests that their R&D department completed indicate minimal problems with both durability and flame retardance. Raed states that in several meetings he has recently attended, the company president had repeatedly emphasized the need to increase earnings per share. Raed tells Maher that a decision has to be made within the week about the new products use by National Products Company.
-If Maher approves the use of the product because of perceived pressure for the need of increased earnings per share, though it has not been certified, he probably ____________.

• A) has a strong ego strength
• B) has an internal locus of control
• C) is using the socioeconomic view of social responsibility
• D) has an external locus of control

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Definitions:

Standard Cost System

A cost accounting method that assigns expected costs to products to help in setting budgets and analyzing cost variances.

Volume Variance

The variance that arises whenever the standard hours allowed for the actual output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate. It is computed by multiplying the fixed component of the predetermined overhead rate by the difference between the denominator hours and the standard hours allowed for the actual output.

Variable Manufacturing Overhead

Costs that fluctuate with production volume, such as indirect materials, indirect labor, and other expenses that increase or decrease as production levels change.

Fixed Manufacturing Overhead

Costs related to production that do not vary with the level of output, including salaries of permanent staff and rent of factory premises.