Amalgamated Campus Stores, Inc (ACS) employed student representatives to market grooming aids, casual clothes, and other such products on college campuses. The representatives organized parties at which they displayed samples of all the products
Students who bought products paid the representative, who in turn ordered the products and paid ACS for them. When the products arrived, the student representatives delivered them to the buyers. The representatives paid ACS less than they charged the buyers. The difference represented the earnings of the representatives, who were not employees of ACS. Wall Street investors admired ACS because the company had enjoyed several years of rapid growth in sales and earnings. Last year, the president of ACS predicted further increases in sales of 30 percent. By December, however, it was apparent that the forecasted sales goals would not be met. So during the last two weeks of December, ACS shipped $23 million of merchandise to the sales representatives to be held for future sales parties. The company billed the student representatives and recorded the shipments as sales. In this way, ACS was able to meet its sales goal for the year. Were these merchandise shipments properly recorded as sales?
The shipments were improperly recorded as sales. The goods had not been ordered by or sold to actual customers, and the student representatives had the right to return all the products unconditionally. In this type of arrangement, to report shipments as legitimate sales is certainly unethical and can be, as in this case, illegal when the intent is to deceive. It may turn out that most of the $23 million of products will be returned during January and February.
You might also like to view...
Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts
Indicate whether the statement is true or false
Which of the following is not a step in the target costing approach to pricing?
a. Define the desired profit to be made on that product. b. Dictate which products should not be produced. c. Compute a target cost for the product by subtracting the desired profit from the competitive market price. d. Identify the price at which a product will be competitive in the marketplace.
Effective demand management is most important for a company’s ______.
A. operations B. employee morale C. employee motivation D. compliance requirements
As a manager, George is flexible and adjusts to the needs of those around him even if those needs conflict with his own. It is likely that George has a(n) ______ self-schema.
Fill in the blank(s) with the appropriate word(s).