Cost of Environmental Quality Report You are given the following environmental quality-related costs:
Employee training | $100,000 |
Product design | 140,000 |
Supplier certification | 40,000 |
Process inspection | 320,000 |
Depreciation—pollution-control equipment | 400,000 |
Maintaining pollution-control equipment | 200,000 |
Cleaning up polluted lake | 500,000 |
Restoring land after use | 700,000 |
Property damage claim | 600,000 |
Required
1. Prepare a cost of environmental quality report for the year. Determine subtotals for each of the four reporting categories and express each subtotal as a percentage of total operating expenses ($10,000,000) for the year.
2. Based on the report you prepare, what conclusions can you draw regarding the company’s environmental quality performance for the year?
3. Can you offer management suggestions for the design of an effective cost of environmental quality reporting system? (That is, what would make for a good reporting system?)
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