Exam 14: Quality and Environmental Cost Management

Product recalls are

The environmental cost report contains information on the impact of environmental costs of profitability, and amounts spent on each category of activities.

Maroone Corporation reported the following operating costs and environmental quality costs for the past four years. Assume that all environmental quality costs are variable and that all changes in the quality cost ratios are due to an environmental cost reduction program. Quality Costs as Year OperatingCosts Percent of OperatingCosts 2018 \ 4,000,000 24.0 2019 4,100,000 22.0 2020 4,200,000 20.0 2021 4,300,000 18.0 What is the change in environmental costs from 2019 to 2020?

There are three categories of environmental costs: prevention, internal failure, and external failure.

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: Freceding 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 For the current year, appraisal costs are what percentage of sales?

Cost information is important to managers, to help them improve managerial planning, control, and decision making.

As part of its environmental cost reporting system, Lamborghini Company tracks its total environmental costs. Consider the cost and sales data given: Total Year Environmental Costs Sales Revenue Operating Costs 2018 \ 7,500,000 \ 62,500,000 \ 50,000,000 2019 6,250,000 62,500,000 \ 50,000,000 2020 5,500,000 68,750,000 \ 50,000,000 2021 4,812,500 68,750,000 \ 50,000,000 What is the environmental costs as a percentage of sales for 2020?

At the beginning of the year, Molybdenum Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: Freceding Year Current Year Operating costs \ 2,400,000 \ 2,400,000 Training employees 30,000 48,000 Inspecting processes 7,000 8,000 Operating pollution control equipment 32,000 50,000 Maintaining pollution equipment 60,000 28,000 Devel oping environmental performance measures 10,000 12,000 Cleaning up lake 36,000 24,000 For the current year, external failure costs are what percentage of operating costs?

Hannibal Company produces a number of chemical products, two of which are Product X1 and Product X2. The controller and environmental manager have identified the following environmental activities and costs associated with the two products: Product 1 Product X2 Pounds produced 400,000 1,000,000 Packaging materials (pounds) 120,000 60,000 Energy usage (kilowatt hours) 40,000 20,000 Toxic rel eases (pounds into air) 100,000 20,000 Pollution control (machine hours) 16,000 4,000 Costs of activities: Using packaging materials \ 360,000 Using energy 96,000 Rel easing toxins (fines) 48,000 Operating pollution control equipment 112,000 What is the fines cost per unit for toxic releases of Product X1?

Environmental costs caused internally but paid by outside parties are called __________ costs.

__________ analysis relies in the analysis of fixed and variable costs together with cost.

Which of the following statements is NOT true concerning zero-defects standards?