Activity-Based Environmental Cost Assignments

Shultz Company had the following environmental activities and product information:

1. Environmental activity costs

Activity	Costs
Design products (to reduce pollution)	$ 405,000
Test for contamination	720,000
Treat toxic waste	2,250,000
Operate pollution control equipment	1,800,000

2. Driver data

	Cleanser X	Cleanser Y
Design hours	9,000	4,500
Testing hours	15,750	20,250
Pounds of waste	1,800	43,200
Machine hours	9,000	171,000

3. Other production data

	Cleanser X	Cleanser Y
Nonenvironmental production costs	$7,560,000	$14,670,000
Units produced	900,000	900,000

Required:

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

Design products	$fill in the blank 1	per design hour
Testing	$fill in the blank 2	per test hour
Treating waste	$fill in the blank 3	per pound of waste
Operating equipment	$fill in the blank 4	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	Cleanser X	Cleanser 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 $540,000 and the cost of toxic waste decreased to $1,125,000? Assume that Cleanser Y uses 9,000 out of 18,000 design hours. Also assume that waste is cut by 50 percent and that Cleanser Y is responsible for 21,375 of 22,500 pounds of toxic waste. What is the new environmental cost for Cleanser Y? If required, round your answer to the nearest cent. $fill in the blank 9 per unit

Activity-Based Environmental Cost Assignments Shultz Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs Design products (to reduce pollution) $ 405,000 Test for contamination 720,000 Treat toxic waste 2,250,000 Operate pollution control equipment 1,800,000 2. Driver data Cleanser Y Design hours 4,500 Testing hours 20,250 Pounds of waste 43,200 Machine hours 171,000 3. Other production data Cleanser X Cleanser Y Nonenvironmental production costs $7,560,000 $14,670,000 900,000 Units produced 900,000 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 Cleanser X Cleanser Y Unit environmental cost Cleanser X 9,000 15,750 1,800 9,000 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 Cleanser X Cleanser Y Unit environmental cost Unit cost 3. What if the design costs increased to $540,000 and the cost of toxic waste decreased to $1,125,000? Assume that Cleanser Y uses 9,000 out of 18,000 design hours. Also assume that waste is cut by 50 percent and that Cleanser Y is responsible for 21,375 of 22,500 pounds of toxic waste. What is the new environmental cost for Cleanser Y? If required, round your answer to the nearest cent. per unit Check My Work Previous Next