This was Joel Craig's first visit to the controller's office sincebeing recruited for the senior accountant position in May. Because hehad been directed to bring with him his preliminary report on year-endadjustments, Craig presumed he had done something wrong in preparing thereport. That he had not was Craig's first surprise. His second surprisewas his boss's request to reconsider one of the estimated expenses.

S & G Fasteners was a new company, specializing in plasticindustrial fasteners. All products carry a generous long-term warrantyagainst manufacturer's defects. "Don't you think four percent of salesis a little high for our warranty expense estimate?" his boss wondered."After all, we're new at this. We have little experience with productintroductions. I just got off the phone with Blanchard (the companypresident). He thinks we'll have trouble renewing our credit line withthe profits we're projecting. The pressure's on."

In your initial post, consider the scenario above and address the following:

• Discuss whether Craig should follow his boss's suggestion and lower the percentage.
• Does revising the warranty expense estimate pose an ethical dilemma for Craig? Please explain your response.
• What stakeholders would be affected if the organization followsthe suggestion to lower the estimated warranty expense percentage? Howwould each group be hurt by this move?