Calculate the environmental cost per pound for each product

Assignment Help Cost Accounting

Reference no: EM13950254

Faraday Chemical produces two chemical products: an herbicide and an insecticide. The controller and environmental manager have identified the following environmental activities and costs associated with the two products:

	Herbicide	Insecticide
Pounds produced	12,000,000	30,000,000
Packaging materials (pounds)	3,600,000	1,800,000
Energy usage (kilowatt hours)	1,200,000	600,000
Toxin releases (pounds into air)	3,000,000	600,000
Pollution control (machine hours)	480,000	120,000
Costs of activities:
Using packaging materials	$5,400,000
Using energy	1,440,000
Releasing toxins (fines)	720,000
Operating pollution control equipment	1,680,000

Required

1. Calculate the environmental cost per pound for each product. Which of the two appears to cause the most degradation to the environment?

2. In which environmental category would you classify excessive use of materials and energy?

3. Suppose that the toxin releases cause health problems for those who live near the chemical plant. The costs, due to missed work and medical treatments, are estimated at $3,240,000 per year. How would assignment of these costs change the unit cost? Should they be assigned?

Reference no: EM13950254

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