Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 14, Problem 43P
The following environmental cost reports for 20x3, 20x4, and 20x5 (year end December 31) are for the Communications Products Division of Kartel, a telecommunications company. In 2011, Kartel committed itself to a continuous environmental improvement program, which was implemented throughout the company.
At the beginning of 20x5, Kartel began a new program of recycling nonhazardous scrap. The effort produced recycling income totaling $25,000. The marketing vice president and the environmental manager estimated that sales revenue had increased by $200,000 per year since 20x3 because of an improved public image relative to environmental performance. The company’s Finance Department also estimated that Kartel saved $80,000 in 20x5 because of reduced finance and insurance costs, all attributable to improved environmental performance. All reductions in environmental costs from 20x3 to 20x5 are attributable to improvement efforts. Furthermore, any reductions represent ongoing savings.
Required:
- 1. Prepare an environmental financial statement for 20x5 (for the Products Division). In the cost section, classify environmental costs by category (prevention, detection, etc.).
- 2. Evaluate the changes in environmental performance.
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At the beginning of the year, Cinnabar Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data were collected for the year:
Operating costs
$2,500,000
Designing products
2,500
Auditing environmental activities
6,000
Recycling products
22,000
Disposing of toxic waste
37,000
Testing for contamination
15,000
Cleaning up oil spills
41,500
Which of the following expresses the environmental costs incurred on prevention activity as a percentage of operating costs (rounded to two decimal places)?
a.
0.98%
b.
0.15%
c.
2.46%
d.
4.96%
At the end of 20x5, Alpha Pharma began to implement an environmental quality management
program. As a first step, it identified the following costs in its accounting records as
environmentally related for the calendar year just ended:
Settling personal injury claims
Treating and disposing of toxic waste
Cleanup of chemically contaminated soil
Inspecting products and processes
Operating pollution control equipment
Licensing facilities for producing contaminants
Evaluating and selecting suppliers
Developing performance measures
Recycling products
20x5
3,000,000
12,000,000
4,500,000
1,500,000
2,100,000
900,000
300.000
150,000
187,500
Required:Prepare an environmental cost report by category. Assume that total operating costs
are 150,000,000. Round percentages to two decimal places, if rounding is required.
At the beginning of the year, Kowalski Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
Preceding Year
Current Year
Sales
$3,000,000
$3,000,000
Quality training
3,000
4,500
Material inspections
7,500
12,000
Scrap
60,000
45,000
Rework
120,000
75,000
Product inspection
15,000
30,000
Product warranty
105,000
82,500
If quality costs had been reduced to 2.5 percent of sales in the current year, profits would have increased by
a.$174,000.
b.$91,500.
c.$37,500.
d.$255,000.
Chapter 14 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 14 - What is the difference between quality of design...Ch. 14 - Why are quality costs the costs of doing things...Ch. 14 - Prob. 3DQCh. 14 - Describe the Taguchi quality loss function, and...Ch. 14 - Identify and discuss the four kinds of quality...Ch. 14 - Explain why external failure costs can be more...Ch. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Describe the three types of quality performance...Ch. 14 - Prob. 10DQ
Ch. 14 - If a firms annual sales are 200 million, what...Ch. 14 - Explain why it is important for a manager to...Ch. 14 - Prob. 13DQCh. 14 - Explain why the Accounting Department should be...Ch. 14 - Prob. 15DQCh. 14 - What is ecoefficiency?Ch. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - What are the four categories of environmental...Ch. 14 - Prob. 21DQCh. 14 - What does full environmental costing mean? Full...Ch. 14 - What information is communicated by the unit...Ch. 14 - Evans Company had total sales of 3,000,000 for...Ch. 14 - Prob. 2CECh. 14 - Ross Company implemented a quality improvement...Ch. 14 - Nabors Company had actual quality costs for the...Ch. 14 - Verde Company reported operating costs of...Ch. 14 - Pinter Company had the following environmental...Ch. 14 - Rachel Boyce, president of a company that...Ch. 14 - Quality attributes such as performance and...Ch. 14 - Stahman, Inc., estimates its hidden external...Ch. 14 - Prob. 10ECh. 14 - Abernathy, Inc., produces two different generators...Ch. 14 - Kang Company reported sales of 3,240,000 in 20x5....Ch. 14 - Gagnon Company reported the following sales and...Ch. 14 - Muskogee Company had sales of 60,000,000 in 20x1....Ch. 14 - Javier Company has sales of 8 million and quality...Ch. 14 - In 20x4, Tru-Delite Frozen Desserts, Inc.,...Ch. 14 - Prob. 17ECh. 14 - Prob. 18ECh. 14 - Achieving sustainable development will likely...Ch. 14 - Classify the following environmental activities as...Ch. 14 - At the end of 20x5, Bing Pharmaceuticals began to...Ch. 14 - Prob. 22ECh. 14 - Coyle Pharmaceuticals produces two organic...Ch. 14 - Prob. 24ECh. 14 - Which of the following quality costs is an...Ch. 14 - Which of the following would be a hidden quality...Ch. 14 - Using the Taguchi quality loss function, an...Ch. 14 - Environmental costs are those costs incurred...Ch. 14 - Two products, Product A and Product B, are...Ch. 14 - Kathy Shorts, president of Oliver Company, was...Ch. 14 - Panguitch Company manufactures a component for...Ch. 14 - Gaston Company manufactures furniture. One of its...Ch. 14 - Classify the following quality costs as...Ch. 14 - Wayne Johnson, president of Banshee Company,...Ch. 14 - Recently, Ulrich Company received a report from an...Ch. 14 - In 20x5, Major Company initiated a full-scale,...Ch. 14 - Paper Products Division produces paper diapers,...Ch. 14 - In 2011, Milton Thayne, president of Carbondale...Ch. 14 - Iona Company, a large printing company, is in its...Ch. 14 - Prob. 40PCh. 14 - The following items are listed in an environmental...Ch. 14 - Refer to Problem 14.41. In the environmental...Ch. 14 - The following environmental cost reports for 20x3,...Ch. 14 - Refer to Problem 14.43. In 20x3, Jack Carter,...
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