Verde Company reported operating costs of $42,000,000 as of December 31, 20x5, with the following environmental costs: Testing for contamination Inspecting products Treating toxic waste $ 756,000 714,000 1,554,000 Obtaining ISO 14001 certification Designing processes Cleaning up oil spills 546,000 546,000 3,318,000 Maintaining pollution equipment Cleaning up contaminated soil Required: 756,000 4,914,000 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. Round percentages to two decimal places, if rounding is required. For example, 5.79% would be entered as "5.79". Verde Company Environmental Cost Report For the Year Ended December 31, 20x5 Environmental Cost Total Environmental Cost Percentage of Operating Costs Prevention costs: Detection costs: % % Internal failure costs: $ % External failure costs: Total quality costs % % 2. What if Verde deliberately did not include the cost of damaging the ecosystem because of solid waste disposal in its environmental cost report? What is the most likely reason? The costs are inconsequential and are therefore immaterial. The costs are social costs and formal recognition is not required. The statement users have no interest in this cost.