I would argue that this situation constitutes Illegal Gratuity, but it hinges on whether he approached her before or after the land sale. If he did so prior to the transaction, then it clearly represents <span>illegal gratuity.</span>
If the department is eliminated, a saving of $10,000 would occur. This is based on the data provided: the annual contribution margin is $35,000, and the annual fixed costs are $70,000. If fixed costs of $25,000 cannot be avoided, the losses when the department operates can be calculated as follows: Loss = contribution margin - fixed costs = $35,000 - $70,000, which indicates a loss of $35,000. If the department were to be removed, the unavoidable fixed cost drops to $25,000, resulting in a loss of $25,000. Therefore, the savings from eliminating the department is calculated as: Savings = $35,000 - $25,000, leading to a total saving of $10,000.
Answer:
In addressing the relevant response, it is inferred that units are measured in thousands for the request.
Thus, the complete commitment would be:
Sales = 49950
Variable Costs = 10500
Variable Selling Expenses = 18250
Contribution Margin = 21200
Considering the client's insistence on maintaining the commitment at a specific level, this would not benefit the organization as it would not yield the same level of $ 21200 as the commitment, especially since an additional $ 5000 would be required for the custom discharge despite eliminating selling costs; thus the revised figures would be:
Sales = 23320
Variable Costs = 10500
Variable Selling Expenses = 0
Contribution Margin = 12820
Part 1: Accounting concerns:
- This situation would create a bookkeeping challenge to report sales at a price lower than what is charged to other clients.
- Accepting the order would lead to an accounting deficit.
Ethical considerations:
- Other clients might be dissatisfied as they would be charged a higher rate for similar services.
- Furthermore, employees may also feel undervalued as the overtime expenses may not compensate for the extra time spent with the family
