Reference no: EM13950141
In 2006, Paula Nabors, president of Phelps, Inc., requested that environmental costs be assigned to the two major products produced by the company (two MP3 models: standard and luxury versions). She felt that knowledge of the environmental product costs would help guide the design decisions that would be necessary to improve environmental performance. The products represent two different models of MP3 (Standard and Luxury). The models use different processes and materials. To assign the costs, the following data were gathered for 2006:
|
Activity
|
LuxuryModel
|
Standard Model
|
Activity Cost
|
|
Disposing of hazardous waste (tons)
|
240
|
2,160
|
$ 2,400
|
|
Measuring contaminant releases (transactions)
|
12,000
|
48,000
|
120,000
|
|
Releasing air contaminants (tons)
|
300
|
2,700
|
6,000,000
|
|
Producing scrap (pounds of scrap)
|
300,000
|
300,000
|
2,100,000
|
|
Operating pollution equipment (hours)
|
1,440,000
|
4,800,000
|
3,120,000
|
|
Designing processes and products (hours)
|
18,000
|
6,000
|
600,000
|
|
Using energy (BTUs)
|
7,200,000
|
14,400,000
|
2,160,000
|
|
Training employees (hours)
|
600
|
600
|
120,000
|
|
Remediation (labor hours)
|
60,000
|
180,000
|
4,800,000
|
During 2006, Phelps produced 2,400,000 units of the luxury model and 3,600,000 units of the standard model.
Required
1. Using the activity data, calculate the environmental cost per unit for each model. How will this information be useful?
2. Upon examining the cost data produced in Requirement 1, an environmental engineer made the following suggestions: (1) substitute a new plastic for a raw material that appeared to be the source of much of the hazardous waste (the new material actually cost less than the contaminating material it would replace) and (2) redesign the processes to reduce the amount of air contaminants produced (at a cost of $3,000,000 in 2007 and $600,000 in 2008 with annual increase of recurring costs of $200,000 to maintain the new process).
As a result of the first suggestion, by 2008, the amount of hazardous waste produced had diminished to 600 tons, 120 tons for the Luxury Model and 480 tons for the Standard Model. The second suggestion reduced the contaminants released by 50 percent by 2008 (50 tons for the Luxury Model and 450 tons for the Standard Model). The need for pollution equipment also diminished, and the hours required for the Luxury Model and the Standard Model were reduced to 720,000 and 2,400,000, respectively. Calculate the unit cost reductions for the two models associated with the actions and outcomes described (assume the same production as in 2006). Do you think the efforts to reduce the environmental cost per unit were economically justified? Explain.
|
Exchange currency risk with its forward market hedge
: Suppose a U.S. firm buys $200,000 worth of stereo wire speaker from a Mexican manufacturer for delivery in 60 days with payment to be made in 90 days (30 days after the goods are received). The rising U.S. deficit has caused the dollar to depreciate ..
|
|
Regression statistics on several mutual fund and indexes
: You are given the following regression statistics (sort of RBSA) on several mutual fund’s and indexes. These statistics are based on monthly data from the 1984–1993 period and the units are % per month. All regressions were performed using raw return..
|
|
Discuss the effectiveness of these us supply-side policies
: Describe US international policies and initiatives to eliminate/reduce (1) cultivation and production of cocaine, and (2) organized crime and narco-trafficking in cocaine. Discuss the effectiveness of these US supply-side policies.
|
|
What is the net cash flow of the project for the years
: Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,640,000. The fixed asset falls into the three-year MACRS class (MACRS Table). Assume that the tax rate is 35 percent and the requi..
|
|
Calculate the unit cost reductions for the two models
: Calculate the unit cost reductions for the two models associated with the actions and outcomes described. Do you think the efforts to reduce the environmental cost per unit were economically justified? Explain.
|
|
Two publicly-traded companies in same health care segment
: For the second part of the course project, you will perform a critical evaluation and comparison of two publicly-traded companies in the same health care segment. Your answer should apply the financial concepts and practices covered in this course to..
|
|
Managing human resources in health and social care
: Critically reflect and analyse the different approaches that can be used in the recruitment process at Silver Meadows Care Home - evaluate the different approaches that can be used to ensure the selection of the best individuals for work within Silv..
|
|
Which policy do you think has the largest deadweight losses
: When the government of Trade land decides to impose an import quota on foreign cars, three proposals are suggested: (1) Sell the import licenses in an auction. (2) Distribute the licenses randomly in a lottery. (3) Let people wait in line and dist..
|
|
Short article from the wall street journal
: Options traders were quick to take positions in Research In Motion Ltd. after the BlackBerry maker said fourth-quarter earnings were likely to come in at the lower end of projections. Early in the day, one trader backed out of a bullish "call spread"..
|