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While eating lunch at her desk, she thought about the coming year.Next year, my department will probably be asked to process some 9,000,000 gallons of waste. Our variable costs are about $.20 per gallon, and our fixed costs are about $1,400,000. So, the total cost should be somewhere around $3,200,000. I better submit a budget of around $3,900,000.The citys tax revenues are down and the city controller will probably reduce whatever budget I submit by 10 percent. And what if I end up incurring higher expenses than anticipated? A new labor contract, for instance, could increase costs by more than $200,000.Or waste could be 500,000 gallons higher than estimated. The last thing I want is to incur more costs than budgeted. I've got to stay within budget to have any chance for a promotion out of this stinking department!Required:
Discuss whether it is ethical for Ann to submit a budget for an amount higher than the cost expected to be incurred.
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