PLEASE ANSWER THE FOLLOWING QUESTIONS BASED ON THE CASE FACTS BELOW (NOTHING IS MISSING)

1) What are major issues/problems?

2) What are the decision-makers goals and objectives?

3) Are there other stakeholder needs or preferences?

4) Are there any internal or external constraints to consider?

5) What qualitative factors should the company consider when evaluating alternatives?

6) What technical factors should the company consider?

INTRODUCTION Jacobs finally hired Terry Wilbur, a full-time environmental manager with several years of experience Moulder Company was founded in 1922 by William A. in the field. Wilbur took over the duties of several Moulder III, son of a shipping magnate from Framingham, engineers, who had performed the work in their spare Mass. Moulder left Framingham and moved to Western time, with a mandate to ensure compliance while "keeping Massachusetts to seek his fortune in wood products environmental spending within reasonable limits." Wilbur manufacturing. For decades, Moulder Company specialized realized the mandate would be difficult to fulfill given the in value-added products, such as fine-milled lumber, doors, significant environmental risks. Regulators were increasingly and specialty moldings. In the 1950s, he expanded Moulder assertive, and stakeholders were more vocal. Additionally, Ca's product line to include a Seating Division that focused guidelines under the Massachusetts Toxics Use Reduction on stadium seating. William Moulder ran the company Act (TURA) suggested a proactive pollution prevention (P2) until he retired in the late 1970s, and his son-in-law, approach, which also could unveil strategic possibilities that Wilson Jacobs, took over as President. Jacobs expanded the forward-thinking companies could use.* company and organized it into four divisions. The Seating Soon after beginning his new cole, Wilbur set up the Division eventually became the largest and most profitable Environment, Health, and Safety (EH&5) team. Drawn part of the company. primarily from the Seating Division and Corporate Services Boch Moulder and his successor Jacobs viewed (see Figure 1 for organizational chart), the core members environmental management expenditures as a burden on of the EH&S team included Wilbur; Phil Bingham, che the business that reduced profits and inhibited productive controller who oversaw all accounting and tax functions ac investment in a new plant and equipment. Ver the industrial Moulder, and Paul Grimes, the staff accountant who was environment had undergone changes because of increased recently hired to support operational accounting and internal environmental activism that was particularly incense in the reporting New England region. A recent news article became a wake- At che first meeting. the EH&S team invited all members up call for the Moulder Co. enterprise. A community activist of the Engineering, Production, and Controller Divisions group with strong connections to the local newspaper and to explore options and develop an actionable plan. Again other regional environmental groups had begun scrutinizing Wilbur highlighted the importance of P2 He explained that the company Shortly thereafter, the local paper ran a front- P2 was basic to nearly all emerging trends in environmental page article featuring Moulder Co's Thxics Release Inventory rulemaking and regulatory compliance and included initiatives (TRI) reporting data and its environmental impacts.' such as product design changes and technology or processProjock B - Water-based casting option would have estimated Heating all- The vrelation requirements would icdisc handing ail why hok. Caring materisk - The water-based ratings out Environmental compliance - Would be reduced by Mrs. approximately W's more than what Moulder Ca. Training - Exora training in the first three mokis mohoof was currently using, but Wilbur expects the relative operation would mu $10, bill Marc production mining difference to decicast. on an annud lush would mo :lol per yen Production Isbar - Reduce later m 50 hours per year Plant and equipment - $140,COM for equipment and Malromance - Using a water-based cleaning solvent $1501000 for installation, phased start-up, and hot would eliminate the need for a chlorinated solvent and production during chungcorner. wald reduce seat by his. Bug and spray booth Inw hpool - Con would is ENDNOTES reduced by 2031. Litlides Ilocality! - The ventilation requirements would "A TRI relates in the mandated list of cask chemicals that mmpunks ned to kepon a manhired by federal law. Having all - Hearing aid requirements would be reduced Far more information, see www lepapasfmics-rehear- by inventory-cri-program. Training - Extra production training in the first three on "While TURA is che regulation in Massachusetts for mic kis months of operations would cost $, till and amul maining casts would be cut in half. chemicals pollution prevention, provisions under TURA specifically relate to chemicals in the TILL list and chunges Water treatment - Installing new lines and cankage would to chat list over time. When complying with TURA, make $35,010 initially, and then chemicals would most $47030 per year mmpanics effectively reduce their complunce burden Crabsmmmtad canplanes - Wilbur estimated that he an federal requirements under TRI upaning More information an TULA is milahk from Massachusetts would wave shout ten hours per week if bc eliminated using went at this spentin but would add shamcan Department of Eminemmental Ioaction( Max DEP) at hour to check on the water treatment and discharge. www.mass. gon'sca/agencies mandep toxics/tur. Forh fee - Paceorial additiond permit fee of sham !omg TE stands in contrast to common carinmental management mochais like end of che-pipe pollution Project C-Ultraviolet coatings option exits and sirving wars mund and environmental remediation. The later approach works at the facility laundary in clean up toxics Daring materisk - The UV courings oust marc ona that the operation has generated before they enter the per-gallon basis, but personred would use considerably less became the coatings have a higher parentage d slide, election for special treatment are typical end-al-pipeline and over-spray is captured and recirculated into the spray pollution control measures. On the other hand, Packs to reduce or eliminate pollution problems at their source. equipment, vinually climirating wasc. Wilbur projected a More information an 12 is wilable from the EPA uchoice recocoon of shout at'd in the one of cauting materials Production Uber - The summoned spoon would crable the reassignment off at least me employees to other "For a example, bee Edward C Marcni, "Reduce VOC and HAP Emissions," CEP Mayanin, June 2002 wwwniche.org Molromance - IN coatings would reduce the amount of ISSUES/publicationscep/210june reduce-vx-and hap- cleaning solvent required for clean-up by 904. emissions Solvent chpool - The us and disposal of sikvent would VOCs and emitted an poses from certain slide on liquids. They include a variety of chemicals, some of which muy Bug and spray booth Ine dipoud - Would is reduced by have short- and long-term adverse health oficer HAI's are Lhides Cledaidty! - The ventilation requirements world air pollutants listed by the Eminemmental Deaccion Agency Is reduced by 214. UV lamps would cost shout $5,010 (FPA) and promulgated by the Clean Air Act Amendments al TO Do achieve maximum chictable coral. annually in opersic.Figure 1 Moulder Company Organizational Chart MOULDER COMPANY Wilson Jacobs, President Suiting Division Turley Division Lambar Division Carparuin Survive Freduction Word Fabrication A.Libori Note: Naman in bold indicate these involved in the project and whoo nimis appier in the ciria.modifications that involved substituting toxic chemicals with SEATING DIVISION AND FINISHING PROCESSES safer alematives. Wilbur pointed out that more facilities were affirming the benefits of P2 that source reduction led to Moulder's Stadium Seating Division produces two cost savings in areas such as reduced capital investment for product lines bleachers and stadium chairs. Bleachers are end-of-pipe control, lower waste-disposal costs, lower costs manufactured from flat boards while the stadium chairs for complying with environmental regulations, less need for require specialized manufacturing processes because of the worker protective equipment, and lower annual operating complex shapes of the arms, backs, and seats. and maintenance costs. In addition, P4 also encompassed good operating practices such as waste segregation (separating recycling and other forms of waste), preventive maintenance, training and awareness programs, and production scheduling.* The audience responded with both enthusiasm and apprehension. This was a whole new perspective in the audience, and they quickly realized that it called for significant change in procedures and outlook. Nevertheless, all were aware BLEACHER STADIUM that the time had come to address the regulators' concerns, particularly volatile organic compound (VOC) and hazardous Most pollutants (particularly VOCs) emerged during the air pollutant (HAP) emissions. The difficult question now finishing processes, with larger proportion from the stadium was where to begin, so Wilbur began to assess environmental chairs. Moulder Co. uses two types of finishing operations: concerns at Moulder Co. (1) Manual application of coatings for the flat boards usedin the bleacher seating and (2) spray application for the All stadium seating was custom made-to-order with complex wooden shapes of the stadium chairs. Wilbur different finishing specifications that required various finishing focused his P2 assessment on the spray finishing of the arms, times and quantities of materials. Depending on the work flow backs, and seats of the stadium chairs since this accounted and order backlog. workers moved back and forth between the for the highest use of coating materials. bleacher and the stadium chair finishing operations. The finishing process would begin after the wooden The coating materials, purchased in 55-gallon drums, components of the stadium chairs were assembled onto metal were moved to the production area as needed, and the frames and then carried into a large ventilated sperry booth. contents were transferred into the spray dispensers. Typically three or four costs were applied with high volume, Employees were responsible for cleaning the spray low pressure (HVL.P) spray guns: stain, scaler, and two lacquer equipment with solvent after each shift or for coating copcoats. After each cost, the part was carried to a flash-off area changeovers. They obtained solvent from a 55-gallon drum co dry, then to a prep area for sanding before being recumed stored near the work area. When drums were empty, the co the spray booth for the next cost. The spray gun assembly person who emptied them would contact the store mom for (lines, nozzles, and so on) were cleaned with a hydrocarbon replacements. solvent, such as toluene, at the end of each shift and whenever Used solvent was dumped into an open drum, which lacquer pigments were changed. Because these solvents was then rescaled and sent to a centralized waste disposal emit VOCs, the paint booths were equipped with filtered holding area. Contaminated rags and spray booth liners were ventilators. Sperry operators were outfitted with protective also deposited into drums and sent to the waste disposal suits and full-head respirators to meet the [.S. Centers for holding area. Maintenance staff was responsible for calling a Disease Control and Prevention (CDC) National Institute certified hazardous waste hauler to pick up the drums when for Occupational Safety and Health (NIOSH) guidelines." the holding area approached capacity. Figure 2 outlines the The quay launch had assured paper line when was able w la areps in dee stadium chun finishing process. stripped and replaced as needed.Figure 2 Flowchart of Stadium Seating Finishing Production Coated and Dried Stadium Chair (Repeated ma Required) Ventilated Spray Beath Unfinished Finished Finish Coat Applied Stadium Stadium Chair Sanded Conbed Chair Clair Sanded Stadium Stadium Chair Spray Can Pata Cleaned Chair will Tohim Waste Collection Area Used booth liners, To Hazardous weed solvent solvent contaminated rags Lioura solvent, regs Waste HaulerFinancial fenibility was a crucial component of Wilbur's manches in explain pollution prevention options. Wilbur us. Alan Roberts, the plant engineer recalled that, Wa soon realized that the cont system was not equipped in used a metal of about five in six drum per month for all provide the granular information in analyze crimemental operation, but we do not back advent use for madio chair costs. The current management accounting spasm provided finishing." After a pause, he added: "Probably half of what is on aprepared picture of direct bbar and materials crees used for stadium chair finishing ends up an fugitive cristian hey job. Binglum noted that the out clavification system or is slashed by cleaning rags." had applied a traditional approach moses, without any Roberts grimaced such "fugitive emissions" amounted consideration of corimoment-schrod facean. The next to "about a drum per march for stadium chair finishing." important nep was to gather the required information for the Dispaul cast for rag and spray leach liner was $10 0810 per financial analysis. year for stadium chair finishing. Ell&5 tram training coat for The recting bought many bey clients into fixins. the finishing line was shout $2 010 per person. Moulder Co. Before adjourning the macting, two beans were asigned a trained ewo employees per year. picpure Reports for the next meeting, Wilbur wald memos The energy costs far finishing uadium chairs pard back (Frimen's team would gather coat indamnation an current another challenge. A quick call in Bill Talisx, the production finishing operation in the stadium division, and Hinghanks engineer confirmed that a portion of the hearing aid hill team fincluding Pawz Stingy from the Engineering division could be linked mo stadium seating. He eximared that wakh and Fles Trombley, the ulea manager would replace hearing all ma anribantable in stadium chair finishing was the motives in the stadium chair finishing operations. the increased ventilation requirements to contain "fugitive emission Such ventilation mus reasked in a arcrall COLLECTING THE COST INFORMATION increase in the hearing coats of about 214. Inaddican, he alem estimated that the portion of electricity bill anibutable Grimes reviewed the financial records with the finishing to backum chair finishing ventilation was shout It4. processes to identify a list offan nud operating costs stunned Crimes crenpiled the information from the team's records with finishing the vadu chair products The words and discussions with other employees, adding a checklist for provided information on cuting materials, production bale, computing the current mus for radium chair finishing !see and maintenance primarly clearing when) Grimes welived Appendix Aj due there were other finishing crees within the overheads but was not sure how to identify or classify them. Wilbur and POLLUTION PREVENTION OPTIONS Grimes went to work examining the rounds and interviewing he operation personnel, and they identified the ather seats for Meanwhile, the second team had begun in sandike esumive finishing, namely advert disposal, rag and spray beach dispaul, research into doom the sunent sakrand beauer finishing Emphasizing the need mmeet the TIRA guidelines, the cream and employee and EH&Steam training. Grimes then began came up with three opiom by the radium chair gathering the mets, archer significant challenge involving Project A involves switching from sealer and lacquer further interviews of penonnel involved in krivition aviciand coatings that werage 204 solid mo coatings with 314 slide. with finishing The forenun, Tim Elkind, keeptrack of the mal To crable proper application of the material with HM.P number of hours wacked at each arca He had assigned finishers guns, Moulder Con would have to hear the coatings in-line on a wearing basis in track the amounts of each type of finishing and would need to work with its equipment supplier es merid wed breach job modify the upray gun caps, mandes, and tips. These high- Wilbur handled max at the corinnened canplans adida cravings wich HVL.I' spray guns contain approximately work-tracking hazardous waste, labeling it, linking haneen Hire fewer VOLs and Hira fewer HAS division, and marc-but acknowledged that he had max yet The sand quim, I'maja B, imohess more significant kept very good track of the amount of time he spent within each division, much less on any specific acivity Wilbur While the parencud environmental gains are significant, the needed an estimate of his own cie spent on complunes, firmcil benefits are less certain, and Wilbur is shee covered and fear some reflection, cuimuted that "I spend absent in eighth of my time on compliance activities for stadium chair particularj make it clear that they prefer the high chen of finishing operations" the conventional nincellulme lacquer Nevertheless, thewater based coatings would reduce VIKs and HAs by marc capital for all divisions was set at 206. All long-term arahis chan 25% and would climinute the need to use chlorinated sound in comenk listing of 10 years, wing the right- when for chan-up. The water used for cleaning the spray line method for depreciation. Hingham noted that the hurdle equipment would require sanc type of braunent in allow mic included a risk premium, particularly given uncertainties its chiacharge under on raising Mariorul Pollutant Discharge in regulary manchores for toxics emission. Wilbur then Elimination System (NIDES) permit, ban Wilbur didn't reviewed the dicmative project option. He suggested that anticipate any problems with that, other than a potential a discount ian risk premium was in order if masks emissions additional permit fee of about full per year. could be reduced significandy. In particular, Project Could The third again, I'mject Co emerged from a suppaton wanant och s discount given its pucnial of clinirating Given an employee who had previously worked far s competing the use of trains in the Tasks Release Inventory, thereby in the Northwest. It involves the possibility of installing a state- transforming stakeholder perception of the company of-the-are udravidet crating system. Mthough ucch salems There was aloe the postbility that improved quality and had been installed in the industry primarily in court flat bourke, stakeholder apprecicion could have a positive impact m the worch an these used on the bleacher seating new equipment had prices of sime anders. Tombkey printed out that product been inbacked by one vendor in cruble the use of ulavishs enhancement from I'mper ( processes might lead man coating on the mass samples dimension of other wood scaring overall increase in anal cash flow from increased prices and furniture.* The sechadagy looked promising but did not you have on cuentoz track round for the rips off application who prefer the high-plan finich ( Customer5 )muck Boulder Ca. was considering. Morcover, in amenaed rem ather alemathugs. would require a significant up front investment. Verit did have the patchrid in generate major savings in materials and bhair CONCERNS AND FUTURE CHALLENGES and provide significant environmental advantages. Wilbur's research team examined the diemative projects The meetings had raised awareness of the new realities in detail, considering the differences in technology and of the regulaary crimmment for mics. Without a doubt, its impact on the cast clements identified carlier. Their change was incvirshke. Significant careerm now emerged summary estimates arc explained in Appendix R. about crat allocation for the different job anders that varied with finishing details. Thankly expressed her cararm PREPARING THE FEASIBILITY REPORT that the prices did not sufficiently reflect the specific equipment of sauceHomeTO The PodRian EngineR & the next meeting, the mao crams discussed their findings. inquired shout the need in determine grimmmental coals Wilbur explained the need in prepare a feasibility report that may occur during other phases of the product cycle and that integrated all the research and arulyan. This report was other products to go, the bleacher productk Clearly there so he presented in the management team headed by Jacks was concern that not all environment mous were identified, and would need to highlight the technical, finmciad, and that wane remained hidden. While the early cancer was the qualitative sopecto of alternatives in the existing system. need to mund cats, Bingham now underaand the need a Technical specis included reliability and oliexciveness make clunges in the cont system, including adding nave of new equipment in meeting pollution and marsica use relevant coat classification. Clearly that involves significant targets while qualrative factor include the impact of the time and elian and, mast impartandy, attaining clear new processes on product and environment quality. While directives from top management. the engineering bean focused primarily an technical and The new initiatives had raised an awareness of the qualitative mepacts, the finncul momparent, as Wills impact of the firm's operations an the employees and ohened, provided a basis for determining the viability of technical and qualitative aspects of the aralysis. Finmcid howard from contaminants, closure clunge, and ather such enibility for new immesomente was determined througha zucmalitica largely overbooked in the past, uck now part of capital budgeting process lused on company-wide criteria the comerszion. Wilbur realized that much remained in ba Hingham remarked that capital badgering at Moulder done for Moulder Cn. co adapt in the environmental risks in Co. had always been a birly informal process. Equipment the amazing roulmary emimoment, not the lea of which interanches required a tive-year payluck, while smaller was porting buy-in iran mip management. Nevenhckas, he equipment required thice years. The hurdle raic lous of was optimistic. They had gotten off in a good start!Man you me pant of Wilbur's EHAS mean responsible for Environmental Protection Agency (EPAL " An Introduction preparing the feastbility report due would justify a course of to Environmentd Accounting An A Business Management action. Ammer the questions below as a basis for preparing Tard: Key Concepes and Teams, " June 198, hapAl.in. the pon: BY IHWWINS. 1. To perform the financial arulyons, compare I'rejects A, H, and Clby using payback period, net present value Lacing-Brow Casing, Statements on Management INPV) and internal care of recum (IILR) Camider tax Accounting, 2014, www imanandres default-song implications on operating cash flows, including the impact of depreciation cas shield assuming that all wowcats have a 10- year useful life and tax moon of 154. IMA (losticus of Management Accountants) Enterprise Rent (Hine To calculate cach outflows, adjust cas deductions preciation was shield is considered separately) Statements an Management Accounting FU14, wwwimmer. I'vesent sensitivity analysis of NIV foxx Projects Band C, anderikchuk-same thought leadership coverruns_ mridering the fallwing Risk assessment considered in coat of capital hurdle rate Wilbur assessed that Project Homerined : If 150 (Incremationd Organization for Standardization), Environmental management: The 150 14080 Emily discount and Project Oncried a Fe discount because of Inenational Standards," Bird, wwwisseminar Sales impacts on projects as indicated by Trombley: Thankley's projections showed an excimaced $80 United Nackmis Division for Susairahl Development, net decrease in annual cach threw in I'maject h from Environmental Management Accounting I'mcedurs and as of "Cusooner and an estimated $20100 net Principles, " Bill, New York, N.Y, www.un.org/cumunder increase in annual cash flows for I'maja C from publicactions proceduresandprinciples.pall. changes in rules and selling prices. Compare the alternatives by incegrating any qualitative APPENDIX A and technical aspects of the project that might argue far ar against its implementation. Indicate your preferred sprice in the contest of the thee componentsof the INFORMATION FOR COMPUTING CURRENT COSTS feasibility report and explain your reasons how chasing that apeion Consider the implications of the cost among musicma, particularly any shunned werkneu. The discussion during the mosting am expand weakneses in the mad acounting system. Describe how the mu been could be adapted to support earinmental anting licview relevant reading m eminental Enginering Staff nuragement accounting from the Reference List Forman Sad parlour emphasizing how the system could develop and support: 519 parlour I. Cost classifications to identify and measure Finicharm 519 parlour environmental impacts of toxics, b. Cox allocation [applying Je tivity-Band Caning Moulder Con operated for 50 weeks during the year. An to improve pricing and coat moods for multiple merge work week comined of #1 hours products, and z. Management of environment coats and decision making through improved measurement of cost.Environmental Compliance - Calculate Wilbur's cime in "A mal of 12 people are employed in the bleacher finishing stadium chair finishing. and stadium chair finishing operations. "The Workly Summary Training Casts - Calculated based an Radaris's guimares. Labor Report for stadium chair finishing books like this APPENDIX B: POLLUTION PREVENTION OPTIONS The newcach ican canc up with three options J'rejects A B, and ( for the stadion chair, with careful cansideration of coat implications and the use of invic items listed under the Their Reduction Inventory, and presented them in Wilbur. Cent lincluding taxsal Project A- High-salida cantings with HVLP spray guna would $4 in per gallon have carts and hirings in listed hire Lacquer $7.10 per gallon Coating materials - The higherandids soarings are about Sealer doubl the coast of the low-saliche courings in s per gallon Sahent $04 per pound (Il pounds per gallonk hasin, but less material is uned machieve the cane finished Schent Digaul $1.10 per pound All pounds pergallont thickness. Combined with the climination of the woand Electricity Asault 94,/00 per month top coat, mal quantity of coming purchased was expected Hening Oil m decline, but the total our was propered in be about Its name given the higher ma of the high-solids crings The supplier expected the price dificecial mikecrease as mus companies switched to higher-wilds cringe. Coating Callom Production labor - The higher-slidecoating would eliminate the red box a woand top coat in meat cows and Healer then would reduce labor by sean 4 50 hours per year on Lacquer constant volume. The wake coat, however, would be mare difficult mound, requiring achical rather than black sanders CHECKLIST FOR COMPUTING CURRENT COSTS and an additional 1 080 hours of labor per year Stadium chair finishing operation coats will include: Maintenance - Cleaning advent requires an increase of Daring Material - Dison has provided the required shan Jib maze due m higher visaairy of the material. information. Solvent disposal - Incicoxx disposal by one half of the Production Labor - Use weekly labor repast mo cakulare increase in cleaning solvent tic., by 15914 manage weekly hours marked Flag and upray booth liner disposal - No significant change. Cleaning Solvent Coats for Malisnares - Cleaning Willthen Decorkcity) - Hearing the matings requires an advent for maintenance in twice the quantity of fugitive additional $1,000, and increased air flow in the sealer cmission, therefore twodrums of cleaning schenk inc flash-off mes requires an additional $5481. required (5 pullam zahl far regular maintenance. Heating all- Increased air flow in the scaler flash-off arca Cleaning Solvent Disposal Coin - One drum of advent is filled with remaining solvent waste and requires disposal Indrenmental compliance - No significant change. The ather drum in fugitive crisism. Training - Extra production training in the first there in six Bug and Liner Dispound Costs - Driven in rest. months of operations would coat $50800, and annual crats Theirity - Disan has provided the required annual mrs. for training on unchanged. Tibet zuimated It for stadium chair finishing. Awwwork - Rework increases in$14000 per year because Heating Oil- The average monthly heating oil includes there is less margin for anor with a single, heavier mopost. the 25 increases in heating cars for ventilation. Only Plant and equipment - An upgrade to the flash-off area asign this 25 increment cast of addicional ventilation and to modify spray-gun equipment costs an additional for stadium finishing operations