ltz Company had the following environmental activities and product information: Environmental activity costs ivity sign products (to reduce pollution) t for contamination at toxic waste erate pollution control equipment Driver data sign hours ting hours Cleanser X 4,800 8,500 Costs $ 216,000 384,000 1,200,000 960,000 Cleanser Y 4,200 15,500
ltz Company had the following environmental activities and product information: Environmental activity costs ivity sign products (to reduce pollution) t for contamination at toxic waste erate pollution control equipment Driver data sign hours ting hours Cleanser X 4,800 8,500 Costs $ 216,000 384,000 1,200,000 960,000 Cleanser Y 4,200 15,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Activity-Based Environmental Cost Assignments
Shultz Company had the following environmental activities and product information:
1. Environmental activity costs
Activity
Design products (to reduce pollution)
Test for contamination
Treat toxic waste
Operate pollution control equipment
2. Driver data
Design hours
Testing hours
Pounds of waste
Machine hours
3. Other production data
Cleanser X
4,800
8,500
1,000
4,800
Cleanser X
$5,340,000
600,000
$
Costs
$216,000
384,000
1,200,000
960,000
Cleanser Y
4,200
15,500
29,000
115,200
Cleanser Y
$9,000,000
600,000
Nonenvironmental production costs
Units produced
Required:
1. Calculate the activity rates that will be used to assign environmental costs to products.
Design products
per design hour
Testing
per test hour
Treating waste
per pound of waste
Operating equipment
per machine hour
2. Determine the unit environmental and unit costs of each product using ABC. If required, round your answers to the nearest cent.
Activities
Cleanser X
Cleanser Y
Unit environmental cost
Unit cost
3. What if the design costs increased to $306,000 and the cost of toxic waste decreased to $600,000? Assume that Cleanser Y uses 8,400 out of 16,800 design hours. Also assume that waste is cut by 50 percent and that Cleanser Y is responsible for 11,400 of 12,000 pounds of
toxic waste. What is the new environmental cost for Cleanser Y? If required, round your intermediate calculations and answer to the nearest cent.
$
per unit
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