An engineer for the Shaw Group managed a project that Shaw was doing for the U.S. government. Under the terms of the contract, Shaw stood to earn a $2.2 million bonus on the contract if it kept the reportable injuries and lost-work days below certain
levels during the course of the project. The project engineer, who received a bonus if the company met the federal bonus goals, misclassified injuries, failed to report others, and made those who were injured wait to seek medical treatment so that he could meet quarterly injury goals. Discuss the engineer's behavior in light of what you learned in Unit 4 on culture.
There was a culture of incentives and pressure on this project. The numbers that were manipulated were not financial numbers, but safety numbers. The end result was the same – the company made additional revenue. The compensation system involved a bonus for an individual who manipulated results in order to earn his bonus. Be careful what you incentivize – you will get the numbers you want, but perhaps not the result you intended.
You might also like to view...
Brummer Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.1 hours per unit. The variable overhead rate standard is $8.00 per hour. In January the company produced 8,700 units using 910 direct labor-hours. The actual variable overhead rate was $7.90 per hour.The variable overhead rate variance for January is:
A. $87 U B. $91 F C. $91 U D. $87 F
Promotional pricing is a form of deceptive pricing that is illegal in many states
Indicate whether the statement is true or false
Explain the difference between accrual basis accounting and cash basis accounting
A preexisting duty can arise from a person's job or position or it can arise out of an existing
contract. Indicate whether the statement is true or false