Ethics in Cost Control

(Exercise 1-9) Zoya Arbiser, regional manager of Gold Medal Sports Shops, is reviewing the results of 15 stores in her region. Store managers are moved annually. Each store manager’s income is very dependent on the direct contribution margin of that store. For the past year, Store 9 has been managed by a person who has operated several other profitable stores in recent years and is about to be promoted to a larger store. Zoya notices several items that bother her.

Store 9 has almost no personnel training expenses relative to other stores.

Store 9 has stopped participating in numerous community events that gave the store significant visibility but did incur substantial expenses.

Store 6, where this store manager worked the prior year, has had a severe drop in profits due to higher operating expenses.

The advertising budget was spent almost entirely in the first four months of the year, with almost nothing spent in the last several months.

Discuss a possible negative managerial scenario that the regional manager may be sensing. Might the manager of Store 9 be an exceptional manager? What are the ethical implications of the scenario? What is the regional manager’s ethical responsibility in this scenario? Explain and support your position with evidence from the text. Your initial post should be 200 to 250 words.

Discussion 2

Fixed and Variable Costs

(Chapter 1 Discussion Question 9(a)) Controller, Judy Koch, in a recent speech said, “I rarely see a real variable cost or a truly fixed cost.” What did she mean? Include in your response an explanation of the difference in behavior of variable and fixed cost, including an example to illustrate your explanation. Your initial post should be 200 to 250 words.