Question 5: Social and Environmental Management Accounting (14 Marks) Artwork casting operates two plants, one at Timaru and the other at Nelson. There has been a reduction in demand for their products and it is not viable to operate both plants. Management needs to decide which of the two plants it will continue to operate next year. A preliminary analysis shows that the Timaru plant can process material at a faster rate than the Nelson plant. However, this because of an inefficient heating process. Transport costs are cheaper at Timaru as it is located closer to the major suppliers. The following information relates to the two plants for the past year: Timaru Nelson Material cost per kg of cast metal $7 $6.30 Production labour costs per kg of cast metal $6 6 Other variable operating costs per kg of cast metal $19 $9 Fixed cost of the plant per annum $750,000 $390,000 Net cost of closing the plant $2,200,000 $1,600,000 Transport costs inward per kg (included in operating variable costs) $0.35 $0.58 Lost days due to injury per annum 56 21 Emissions per annum 60,000 kg 45,000 kg Waste disposal sent to landfill (per kg of cast metal) 28 kg 20 kg Number of employees 60 40 Currently, both plants process 3,00,000 kg of castings per annum, and both plants have operating equipment that can be used for another five years with no residual value.