BAP22 - Professional Accountants Code of Conduct - Accounting Assignment Help

Assignment Task

Question 1

Good Car Ltd has recently been made aware of an issue in regard to one of their vehicles whereby it appears that the fuel tanks have been positioned incorrectly and are only 15 inches from the rear bumper as opposed to the industry recommended 17 inches. In addition, the vehicles do not have a metal brace separating the fuel tank from the rear of the car, a standard feature in other vehicles. The inherent danger here is that in a rear-end collision the possibility of a fuel-fed fire is enhanced. Consequently, it is likely that the company would have to pay compensation to any victims of accidents in the vehicles.

You are the management accountant within the organisation and you have been asked to provide advice as to what action the company should take. You perform the following analysis.

You estimate that there is potential for two hundred fuel-fed fire fatalities to occur each year in the vehicles with an estimated cost to the company in legal damages for each potential fatality of $500,000. Since the company has 41 million vehicles on the road you conclude that each fuel fed fatality will cost the company $2.40 per automobile. The calculation appeared like this in the memorandum:
200 fatalities x $500,000 per fatality / 41,000,000 vehicles = $2.40 per vehicle

Alternatively, you estimate the cost of recalling the vehicles to be $8.59 per vehicle. In response to your findings the managing director states: “It is not as if the company deliberately designed the cars this way to cause fires. We will compensate any victims accordingly; however we have to look after the interests of shareholders. Hence, we should pursue the cheaper option and continue to compensate victims.”

Required:

Assuming you are the management accountant, write a recommendation as to what the company should do. You may like to consider the professional accountants code of conduct.

This (BAP22) Accounting Assignment has been solved by our Accounting experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.