CASE STUDY 12-44

ANSWERS:
1. ROI based on initial estimates
ROI= Net income/Investment
= $ 1 870 000 / $ 15 600 000
=.1199 or 12%
ROI if income rose to $2.34 million
ROI = Net income/Investment
= $ 2 340 000 / $ 15 600 000
= .15 or 15 %
2. Yes because he is confused if he is going to report the projected income
based on his estimates or set the income to $2.4 milllion which is unlikely to
happen. Sales and expenses projections are companies best estimate of what
will happen to the future, if they set their projections too high they may not
achieve their goal and if he report the projection based on the Mels desire,
he is fabricating the data and report is not fairly represented and he may
even loss his job.
Mel could not ethically justify the raising of sales estimates or lowering the
expense estimates because it is far from likely figures and I dont think he
can back up Jason and put the blame to Jason, because at first place he must
be the one who must do it or sign the report.
3.