Scenario B

question 15

Multiple Choice

Scenario B. Use the information given below to answer the following three questions:
A sales manager is facing an ethical situation wherein his toy company sold a scooter with a defective component. If he informs the customer and issues a recall, it would cost him a substantial amount of money. If the toy malfunctions, it could cause serious injury to the child playing with it. His colleagues have suggested three options:
Option 1: Keeping quiet about the defect
Option 2: Reviewing company policy, toy industry practices, and advice from colleagues
Option 3: Disclosing the defect and suggesting alternatives to eliminate the risk of injury
AACSB: Reflective Thinking
Blooms: Apply
Topic: Five Perspectives Shape Your Ethics
-Which ethical approach is illustrated by option 3?

• A) Egoism
• B) Utilitarianism
• C) Relativism
• D) Virtue ethics
• E) Universalism

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Definitions:

First-In, First-Out Method

An inventory valuation method where the oldest inventory items are recorded as sold first, leaving the most recently purchased items in inventory.

Conversion Cost

The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.

Equivalent Units

Definition: A concept in cost accounting, equivalent units measure the amount of work done on partially finished goods, expressed in terms of fully completed units.

Direct Materials

Raw materials that can be directly attributed to the production process of a good or service and are an integral part of the finished product.