Question

Activity-Based Environmental Cost Assignments Pinter Company had the following environmental activities and product information: Costs $ 157,500 280,000 875,000 700,000 1. Environmental activity costs Activity Design products (to reduce pollution) Test for contamination Treat toxic waste Operate pollution control equipment 2. Driver data Solvent X Design hours 3,500 Testing hours 6,200 Pounds of waste Machine hours 3,500 3. Other production data Solvent x Nonenvironmental production costs $3,200,000 Units produced 500,000 Required: Solvent Y 4,000 13,800 24,300 96,500 700 Solvent Y $7,250,000 500,000

Answer 1

Answer with working is given below

Activity Rates Activities Activity Solvent X Solvent Y 3,500 Design products Testing Treating Water Operating Equipment Activity Rate $21.00 per design hour $14.00 per test hour $35.00 per pound of waste $7.00 per machine hour Cost pool $157,500 $280,000 $875,000 $700,000 Total Activities 7,500 20,000 25,000 100,000 6,200 700 3,500 4,000 13,800 24,300 96,500 Unit Environmental Cost Unit Cost Solvent X $0.42 $6.82 Solvent Y $3.61 $18.11 Working Design products Testing Treating Water Operating Equipment Solvent X $73,500 $86,800 $24,500 $24,500 $209,300 500,000 $0.42 Solvent Y $84,000 $193,200 $850,500 $675,500 $1,803,200 500,000 $3.61 Units Unit Environmental cost Non Environmental cost Units Unit Non Environmental cost $3,200,000 500,000 $6.40 $7,250,000 500,000 $14.50 Activity Rates Activities Activity Rate Cost pool Total Activities Solvent x Solvent Y Design products Testing Treating Water Operating Equipment $15.47 per design hour $14.00 per test hour $50.00 per pound of waste $7.00 per machine hour $247,500 $280,000 $437,500 $700,000 16,000 20,000 8,750 100,000 8,000 6,200 437.50 3,500 8,000 13,800 8,312.50 96,500 Working Design products Testing Treating Water Operating Equipment Total Environmental Cost Units Solvent Y $123,750 $193,200 $415,625 $675,500 $1,408,075 500,000 Unit Environmental cost $2.82