Question

Albright Chemical Company currently operates three manufacturing plants in​Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are120,000metric tons per quarter​ (or 480,000 metric tons in 2018​). Albright management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 456,000metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as​ follows: Total cost to reduce carbon emissions $9 per metric ton reduced in 2019 below 480,000 metric tons Fine in 2019 if EPA guidelines are not met $423,000 Albright Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions. 1. If Albright reduces emissions by 2 % each​ quarter, beginning with the second quarter of 2018, will the company reach its goal of 456,000 metric tons by the end of 2019​? 2. What would be the net financial cost or benefit of their​ plan? Ignore the time value of money. 3. What factors other than cost might weigh into Albright​'s decision to carry out this​ plan? Requirement 1. If Albright reduces emissions by 2 % each​ quarter, beginning with the second quarter of 2018, will the company reach its goal of 456,000 metric tons by the end of 2019? ​(Round all intermediary calculations and the amounts you input in the cells to the nearest​ dollar.) Begin by calculating the quarterly emissions for each quarter through the end of 2019. Quarterly emissions Quarter (metric tons) 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 Will the company reach its goal of 456,000 metric tons by the end of 2019​? Yes, Albright will / No, Albright will not reach its goal of 456,000 metric tons by the end of 2019. Requirement 2. What would be the net financial cost or benefit of their​ plan? Ignore the time value of money. ​(Use parentheses or a minus sign to show a net​ benefit.) _______________ _______________ _______________ ________________ Net cost (benefit) of plan _________________ Requirement 3. What factors other than cost might weigh into Albright​'s decision to carry out this​ plan? Avoidance of the EPA fine should / should not be the​ company's sole motivation in carrying out this plan. Reducing carbon emissions has no impact on the environment is good for the environment, and will contribute to a smaller impact on climate change / is too costly and may not contribute to a smaller impact on climate change. Albright may be able to share this plan with the public to gain favorable publicity / petition the EPA for a waiver. Albright could choose to end this plan at the end of 2019​, and still avoid the EPA fine / pay the EPA fine​; ​however, company management has no obligation to reduce carbon emissions should / strive to continue reducing carbon emissions if they have the technology to do so.

Answer 1

1. Yes, Albright will reach its goal of 456,000 metric tons by the end of 2019 as per the table below-

Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019
4,80,000	4,70,400	4,60,992	4,51,772	4,42,737	4,33,882	4,25,204	4,16,700

2.Net benefit is ($87630) as per below calculation-

Description	Q1 2018	Q2 2018	Q3 2018	Q4 2018	TOTAL
Metric tonnes reduced every quarter	9,600	9,408	9,220	9,035
Cost per tonne	9	9	9	9
Total Cost	86,400	84,672	82,979	81,319	3,35,370
Fine if not complied with law					4,23,000
(Net benefit)/Cost					(87,630)

3.Avoidance of the EPA fin should not be the​ company's sole motivation in carrying out this plan. Reducing carbon emissions has no impact on the environment is good for the environment, and will contribute to a smaller impact on climate change. Albright may be able to share this plan with the public to gain favorable publicity. Albright could choose to end this plan at the end of 2019​, and still avoid the EPA fine ​however, company management has no obligation to reduce carbon emissions should to continue reducing carbon emissions if they have the technology to do so.