Question
In: Accounting
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs...
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Pinter Company had the following environmental activities and product information:
1. Environmental activity costs
Activity Costs Design products (to reduce pollution) $ 118,800 Test for contamination 211,200 Treat toxic waste 660,000 Operate pollution control equipment 528,000 2. Driver data
Solvent X Solvent Y Design hours 2,600 4,000 Testing hours 4,700 12,900 Pounds of waste 500 21,500 Machine hours 2,600 85,400 3. Other production data
Solvent X Solvent Y Nonenvironmental production costs $3,080,000 $6,028,000 Units produced 440,000 440,000 Required:
1. Calculate the activity rates that will be used to assign environmental costs to products.
Design products $ per design hour Testing $ per test hour Treating waste $ per pound of waste Operating equipment $ per machine hour 2. Determine the unit environmental and unit costs of each product using ABC. If required, round your answers to the nearest cent.
Activities Solvent X Solvent Y Unit environmental cost $ $ Unit cost $ $ 3. What if the design costs increased to $208,800 and the cost of toxic waste decreased to $330,000? Assume that Solvent Y uses 8,000 out of 16,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 6,270 of 6,600 pounds of toxic waste. What is the new environmental cost for Solvent Y? If required, round your intermediate calculations and answer to the nearest cent.
$ per unit
Solutions
Expert Solution
1.Activity rates
| Activity costs | Total costs | Total activity | per activity rate |
| Designing costs | 118800 | 6600 | $18 per design hr |
| Testing costs | 211200 | 17600 | $12 per testing hr |
| Treating waste | 660000 | 22000 | $30 per pound of waste |
| Operating equipment | 528000 | 88000 | $6 per machine hr |
2. Unit environmental costs and unit costs
Solvent X
Designing : 18*2600=46800
Testing : 12*4700=56400
Treating waste: 30*500=15000
Operating: 6*2600=15600
Total costs = total environmental costs+ non environmental costs=133800+3080000
=3213800
Total units =440000
Unit environmental costs=$0. 30 per unit
Unit cost=$7. 30 per unit
=$7 per unit
Solvent Y
Designing :18*4000=72000
Testing :12*12900=154800
Treating waste :30*21500=645000
Operating :6*85400=512400
Total costs =Total environmental costs +non environmental costs=1384200+6028000=7412200
Total units =440000
Cost per unit=$16. 85 =$17
Environmental cost per unit =$3. 15 per unit
3.
New environmental cost for Solvent Y
Designing 208800
Testing :154800
Treating waste: 330000
Operating equipment :512400
New Environmental costs: 1206000
Total units:4400000
Environmental cost per unit: $2.75 per unit
I.e $3 per unit for Y
Do give your feedback ! Happy learning :) :)
ekkarill92 answered 5 months agoRelated Solutions
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Test for contamination
128,000
Treat toxic waste
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Operate pollution control equipment
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Testing hours
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3,600
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Machine hours
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Solvent Y
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230,400
Treat toxic waste
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