FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Activity-Based Environmental Cost Assignments

Pinter Company had the following environmental activities and product information:

1. Environmental activity costs

Activity Costs
Design products (to reduce pollution) $ 153,900     
Test for contamination 273,600     
Treat toxic waste 855,000     
Operate pollution control equipment 684,000     

2. Driver data

  Solvent X Solvent Y
Design hours 3,400           2,300          
Testing hours 6,100           9,100          
Pounds of waste 700           18,300          
Machine hours 3,400           72,600          

3. Other production data

  Solvent X Solvent Y
Nonenvironmental production costs $3,344,000      $3,876,000     
Units produced 380,000      380,000     

 

Design products 27 per design hour
Testing 18 per test hour
Treating waste 45 per pound of waste
Operating equipment 9 per machine hour

 

Required:

2. Determine the unit environmental and unit costs of each product using ABC. If required, round your answers to the nearest cent.

Activities Solvent X Solvent Y
Unit environmental cost $fill in the blank 5 $fill in the blank 6
Unit cost $fill in the blank 7 $fill in the blank 8

3. What if the design costs increased to $243,900 and the cost of toxic waste decreased to $427,500? Assume that Solvent Y uses 4,600 out of 9,200 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 8,122.5 of 8,550 pounds of toxic waste. What is the new environmental cost for Solvent Y? If required, round your intermediate calculations and answer to the nearest cent.
$fill in the blank 9 per unit

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