Business Finance Homework Help

1- Nottingham Manufacturing Company allows employees to purchase, at cost, manufacturing materials, such as metal and lumber for personal use.  To purchase materials for personal use , an employee must complete a materials requisition form, which must then be approved by the employee’s immediate supervisor.  Gretchen MacCauley, an assistant cost accountant, charges the employee an amount based on Nottingham’s net purchase cost.

Gretchen MacCauley is in the process of replacing a deck on her home and has requisitioned lumber for personal use, which has been approved in accordance with company policy.  In computing the cost of the lumber, Gretchen reviewed all the purchase invoices for the past year.  She then used the lowest price to compute the amount due to the company for the lumber.

Discuss whether Gretchen is behaving in an ethical and professional manner concerning her actions with the calculation of the cost of lumber for personal use.

2- The following statement was made by the Vice President of finance of Legend Guitars Inc.: 

“The managers of a company should use the same information as the shareholders of the firm.  When managers use the same information in guiding their internal operations as shareholders use in evaluating their investments, the managers will be aligned with the shareholders’ profit objectives.”