Faiz Khaja

BYP 5-6

(a) The stakeholders in this situation are:
• Users of Robbin Industries’ financial statements.
• Wayne Terrago, controller.
• The vice-president of finance.
• The president of Robbin Industries.

(b) The ethical issues in this situation pertain to correct accounting principles. Any kinds of violation of generally accepted accounting principles in order to satisfy a practical short-term personal or company need and create misleading financial statement is wrong. Selecting one acceptable method of accounting and reporting among other acceptable methods is not necessarily unethical.

(c) Ethically, the management of Robbin Industries has a responsibility to report the correct numbers that is in accordance with GAAP. Wayne should inform management what is acceptable accounting and what is not. Normally, advertising costs are expensed in the period in which they are incurred because it is very difficult to associate them with specific revenues.

BYP 6-3 (a) When looking at types of cost for coca-cola sweeteners and packaging are a variable cost because the use is directly proportional to the amount of product produced. If the unit cost of a variable cost item increases, the contribution margin will decline. Therefore, if the company is looking to keep the net income higher they need to either increase price, the number sold or cut other costs (b) However, unlike variable costs, the relationship of marketing costs is not directly proportional to sales, since other factors also influence units sold. Thus, it is not a pure variable cost. However, it is also not a fixed cost, in that there usually is a relationship between marketing expenditures and sales. For CVP purposes, it might best be handled as a mixed cost. (c) The first measure, gallon shipments of concentrates and syrups, is the activity index, since it best