You are a new intern in the Accounting Department at Horner, which supplies chemical instruments for a variety of businesses. The company uses electroplating in the manufacturing process, which generates a considerable amount of hazardous waste. You have noticed that a number of talented employees including salespersons have left the company because they are concerned over the potential impact of production on the environment. As a result, the company’s sales revenues and profitability have dropped significantly. To increase sales and sustain the business, the company is considering paying commissions to its sales team. The CFO asks you to complete an analysis assuming sales would increase 25% under the proposed sales commission plan. This analysis should include (1) the new breakeven sales figure and (2) the operating profit under the new sales commission plan. You are anxious to make a good impression because you want to be offered a full-time position at this company when you have completed your internship. After conducting a thorough analysis, you come across a new clean technology that can significantly reduce hazardous waste. However, the investment in this new clean tech could significantly increase the breakeven points, leading to a potential rejection of your proposal. You decide to not consider this new clean tech to be part of your analysis, because the CFO did not ask you to do that. After completing the analysis as suggested by the CFO, you turn in the proposed sales commission plan analysis in confidence. Your report ends with a recommendation that the new sales commission plan be undertaken, since it will lead to a significant increase in operating income with only a small increase in breakeven sales. The CFO is very impressed with your report and conclusion; it looks professional and complete.

However, when you are booking some payroll entries the following week, you realize that you made an error in the Cost-Volume-Profit analysis you did for the sales commission project. You failed to include the monthly salaries of the sales staff in your computations.

Guidelines : Your write-ups should (1) identify the accounting or business issue(s), (2) answer each question in the problem, and (3) formulate your arguments to support your answers. Do not format your write-up as an essay.

Please answer the following questions and formulate arguments to support your answers:

1. What is (are) the ethical issue(s) in this situation? What steps you should take to resolve this ethical situation?
2. What would be the impact on breakeven sales from failing to include the fixed monthly salaries?
3. Do you think this error (not including fixed salaries) would be likely to influence the decision of whether to proceed with the new sales commission proposal? Why or why not?
4. What would be the tradeoffs between telling and not telling your mistake?
5. What is (are) the business issue(s) the company faces? Please apply concept of the triple bottom line (people, plant, and profitability) from Chapter 1 to discuss the possible issue(s)for the company.
6. Do you think the business can be sustained by this sales commission proposal in the longrun? Why or why not?
7. Do you think the company should invest in the new clean tech? Why or why not?
8. If you were the CFO, what would be alternative (better) business practices to sustain thebusiness in the long run? Please use your arguments to support your alternative proposal..