Calculate an environmental life-cycle cost per unit

Assignment Help Cost Accounting

Reference no: EM13950130

Thomas Manufacturing produces automobile components used in automobile assembly. One of its divisions manufactures automotive front-end pieces. The divi- sion is currently considering two different designs: one using galvanized steel and the other a polymer composite. Both products are considered equally durable. The main issue being considered is the environmental effects of the designs. To help in this assessment, an inventory analysis and the associated cost information for the two designs are given below.

Materials:	Polymer	Galvanized Steel
Virgin materials (pounds)	8	14
Reused production scrap (pounds)	1	6
Energy:
During production (kilowatts/pound)	15	10
During product use (pounds of petroleum used
per year per unit)	66	110
Contaminants:
Gaseous residues (pounds per unit)	0.4	0.2
Solid residues (pounds per unit)	0.6	2.0
Recycle potential:
Incineration (pounds)	7.0	-
Quantity to landfill (pounds)	1.0	0.5
Recycled (pounds)	-	8.5
Financial information:
Cost per pound of raw materials	$ 30.00	$ 15.00
Cost per kilowatt-hour	0.50	0.50
Cost per pound of petroleum	0.70	0.70
Cost per pound of gaseous residue	100.00	100.00
Cost per pound of solid residue	40.00	50.00
Incineration benefits per unit	2.00	-
Recyclable benefits per unit	-	20.00

Required

1. Using the operational measures, assess the environmental impact of each design. What other information would be useful?

2. Using the financial information, calculate an environmental life-cycle cost per unit. Discuss the strengths and weaknesses of this information.

3. Explain why a manager might wish to include product use and disposal information in the assessment of environmental performance. Remember, these costs are not incurred by the company. For example, the petroleum consumption per year is a cost incurred by the end-user.

4. Based on all the above information, what recommendation would you make?

Reference no: EM13950130

Questions Cloud

Calculate the annual return on the mutual funds : Suppose an individual invests $38,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 4.2 percent of the amount invested and is deducted from the original funds invested. calculate the annual return on the m..

What is the net rate of return from this investment : An investor purchases a mutual fund share for $100. The fund pays dividends of $7, distributes a capital gain of $8, and charges a fee of $6 when the fund is sold one year later for $101. What is the net rate of return from this investment?

Zero growth firm with an expected EBIT : The Wallace Corporation is a zero growth firm with an expected EBIT of $800,000 on a permanent basis, and corporate tax rate of 40 percent. Wallace uses no debt, and the cost of equity to an unlevered firm in the same risk class is 12.0 percent. The ..

Identify a product or service that your company provides : Identify a product or service that your company provides. First, consider the product/service from the emotional perspective. What emotion does this product/service elicit from your customers? Does your company use emotions or provide emotions?

Calculate an environmental life-cycle cost per unit : Using the financial information, calculate an environmental life-cycle cost per unit. Discuss the strengths and weaknesses of this information.

Sponsoring sports games and putting up beer gardens : K’s brewery is sponsoring sports games and putting up “beer gardens”, selling drinks and snacks. For the first such event, the manager of the beer garden needs to determine how many pretzels to order. If the game is interesting, the manager thinks th..

Describe situation where this increase of the stock price : Cisco, an IT company, has announced a plan to invest in a new factory, and on the same day, the company's stock price jumped up by 1%. Describe a situation where this increase of the stock price may be interpreted as indicating that investors view th..

Research on mutual fund performance : When you do your research on mutual fund performance, you need to consider the fact that only unsuccessful investment strategies are made public. What is the effect of this fact on your research about the mutual fund performance? (I.e., will the perf..

What is the speculators profit per unit : A speculator buys a call option for $3, with an exercise price of $50. The stock is currently priced at $49, and rises to $55 on the expiration date. The speculator will exercise the option on the expiration date (if it is feasible to do so). What is..

User Account

All Pages