Reference no: EM132825438

This was Jeremy Chase's first visit to the controller's office since being recruited for the senior accountant position in April. Because he'd been directed to bring his preliminary report on year-end adjustments with him, Chase presumed he'd done something wrong in preparing the report. That he had not was Chase's first surprise. His second surprise was his boss's request to reconsider one of the estimated expenses. A&F Fasteners was a new company, specializing in plastic industrial fasteners. All products carry a generous long-term warranty against manufacturer's defects. "Don't you think 4% of sales is a little high for our warranty expense estimate?" his boss wondered. "After all, we're new at this. We have little experience with product introductions. I just got off the phone with Bowman, the company president. He thinks we will have trouble renewing our line of credit with the profits we are projecting. The pressure's on."

Problem 1: Should Chase follow his boss's suggestion? Why or why not?

Problem 2: Does revising the warranty estimate pose an ethical dilemma?

Problem 3: Who would be affected if the suggestion is followed?