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At the end of 20x5, Bing Pharmaceuticals began to implement an environmental quality management program. As a first step, it identified the following costs in its accounting records as environmentally related for the calendar year just ended: 20x5 Settling personal injury claims $3,000,000 Treating and disposing of toxic waste 12,000,000 Cleanup of chemically contaminated soil 4,500,000 Inspecting products and processes 1,500,000 Operating pollution control equipment 2,100,000 900,000 Licensing facilities for producing contaminants Evaluating and selecting suppliers 300,000 Developing performance measures 150,000 Recycling products 187,500 1. Prepare an environmental cost report by category. Assume that total operating costs are $150,000,000. Round percentages to two decimal places, if rounding is required. For example, 5.79% would be entered as "5.79". Bing Pharmaceuticals Environmental Cost Report For the Year Ended December 31, 20x5 Environmental Costs Total Percentage of Operating costs Prevention costs: % Detection costs: % Internal failure costs: % External failure costs: % Total quality costs Cleanup of soil Developing performance measures Evaluating/selecting suppliers Inspecting products/processes Licensing facilities Operating equipment Settling claims Treating/disposing toxic waste Cleanup of soil Developing performance measures Inspecting products/processes Licensing facilities Operating equipment Recycling products Settling claims Treating/disposing toxic waste Cleanup of soil Evaluating/selecting suppliers Inspecting products/processes Licensing facilities Operating equipment Recycling products Settling claims Treating/disposing toxic waste Cleanup of soil Developing performance measures Evaluating/selecting suppliers Licensing facilities Operating equipment Recycling products Settling claims Treating/disposing toxic waste Cleanup of soil Developing performance measures Evaluating/selecting suppliers Inspecting products/processes Recycling products Settling claims Treating/disposing toxic waste Cleanup of soil Developing performance measures Evaluating/selecting suppliers Inspecting products/processes Operating equipment Recycling products Settling claims Cleanup of soil Developing performance measures Evaluating/selecting suppliers Inspecting products/processes Licensing facilities Recycling products Settling claims Developing performance measures Evaluating/selecting suppliers Inspecting products/processes Licensing facilities Operating equipment Recycling products Settling claims Treating/disposing toxic waste Cleanup of soil Developing performance measures Evaluating/selecting suppliers Inspecting products/processes Licensing facilities Operating equipment Recycling products Treating/disposing toxic waste 2. Select the pie chart that illustrates the relative distribution percentages for each environmental cost category. a. b. Prevention Internal Failure 2% 7% Prevention Detection 2% 7% External Failure 30% External Failure 30% Detection 61% Internal Failure 61% c. d. Prevention 7% Internal Failure 2% Prevention 7% Internal Failure 2% External Failure 30% Detection 30% Detection 61% External Failure 61% The correct answer is P C o el
