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)	$ 333,000
Test for contamination	592,000
Treat toxic waste	1,850,000
Operate pollution control equipment	1,480,000

2. Driver data

	Cleanser X	Cleanser Y
Design hours	7,400	3,700
Testing hours	13,200	16,400
Pounds of waste	1,500	35,500
Machine hours	7,400	140,600

3. Other production data

	Cleanser X	Cleanser Y
Nonenvironmental production costs	$6,586,000	$7,918,000
Units produced	740,000	740,000

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 $423,000 and the cost of toxic waste decreased to $925,000? Assume that Cleanser Y uses 7,400 out of 14,800 design hours. Also assume that waste is cut by 50 percent and that Cleanser Y is responsible for 17,575 of 18,500 pounds of toxic waste. What is the new environmental cost for Cleanser Y? If required, round your intermediate calculations and answer to the nearest cent. $fill in the blank 9 per unit