Company A produces Product A for many cell phones currently on the market. Summary data from its 2021 income statement are as follows: Revenues Variable Costs Fixed Costs Operating Income $5,000,000 3,250,000 1,890,000 $(140,000) Michael James, Company A's president, is very concerned about Company A's poor profitability. He asks Steven Williams, the production manager, and Tony Gonzalez, the controller, to see if there are ways to reduce costs. After 2 weeks, Steven returns with a proposal to reduce variable costs to 55% of revenues by reducing the costs Company A currently incurs for safe disposal of wasted plastic. Tony is concerned that this would expose the company to potential environmental liabilities. He tells Steven, "We would need to estimate some of these potential environmental costs and include them in our analysis." "You can't do that" Steven replies. "We are not violating any laws. There is some possibility that we may have to incur environmental costs in the future, but if we bring it up now, this proposal will not go through because our senior management always assumes these costs to be larger than they turn out to be. The market is very tough, and we are in danger of shutting down the company and costing all of us our jobs. The only reason our competitors are making money is that they are doing exactly what I am proposing."