Billing Chemical produces a number of chemical products, two of which are a dyestuff inter¬

mediate and an adhesive for rubber. The controller and environmental manager have identi¬

fied the following environmental activities and costs associated with the two products.

Required:
1. Calculate the environmental cost per pound for each product. Which of the two prod¬
ucts appears to cause the most degradation to the environment?
2. In which environmental category would you classify excessive use of materials and energy?
3. Suppose that the toxin releases cause health problems for those who live near the chem¬
ical plant. The costs, due to missed work and medical treatments, are estimated at $540,000 per year. How would assignment of these costs change the unit cost? Should they be assigned?

Transcribed Image Text:

Dyestuff Intermediate Rubber Adhesive 5,000,000 Pounds produced 2,000,000 Packaging materials (pounds) Energy usage (kilowatt-hours) 600,000 300,000 200,000 100,000 Toxic releases (pounds into air) 500,000 100,000 Pollution control (machine hours) 80,000 20,000 Costs of activities: Using packaging materials $900,000 Using energy 240,000 Releasing toxins (fines) Operating pollution control equipment 120,000 280,000