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)	$ 112,500
Test for contamination	200,000
Treat toxic waste	625,000
Operate pollution control equipment	500,000

2. Driver data

	Solvent X	Solvent Y
Design hours	2,500	5,000
Testing hours	4,400	15,600
Pounds of waste	500	24,500
Machine hours	2,500	97,500

3. Other production data

	Solvent X	Solvent Y
Nonenvironmental production costs	$2,750,000	$5,450,000
Units produced	500,000	500,000

Required:

1. Calculate the activity rates that will be used to assign environmental costs to products.

Design products	$	per design hour
Testing	$	per test hour
Treating waste	$	per pound of waste
Operating equipment	$	per machine hour

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	$	$
Unit cost	$	$

3. What if the design costs increased to $202,500 and the cost of toxic waste decreased to $312,500? Assume that Solvent Y uses 10,000 out of 20,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 5,937.5 of 6,250 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. $ per unit