Question

Environmental Cost Report Verde Company reported operating costs of $27,000,000 as of December 31, 2015, with the following environmental costs: Testing for contamination $ 405,000 Inspecting products 378,000 Treating toxic waste 1,053,000 Obtaining ISO 14001 certification 756,000 Designing processes 378,000 Cleaning up oil spills 1,836,000 Maintaining pollution equipment 297,000 Cleaning up contaminated soil 3,429,000 Required: Hide 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, 2015 Environmental Cost Total Environmental Cost Percentage of Operating Costs Prevention costs: Obtaining ISO 14001 certification $ Designing processes $ % Detection costs: Testing for contamination $ Inspecting products % Internal failure costs: Treating toxic waste $ Maintaining pollution equipment % External failure costs: Cleaning up oil spills $ Cleaning up contaminated soil % Total quality costs $ %

Answer 1

Ans:

Verde Company Environmental Cost Report For the Year Ended December 31, 2015
Environmental Cost		Amount ($)	% of Operating cost
Prevention costs
	Obtaining ISO 14001 certification	756,000	2.80
	Designing processes	378,000	1.40
	Total	1,134,000	4.20
Detection costs
	Testing for contamination	405,000	1.50
	Inspecting products	378,000	1.40
	Total	783,000	2.90
Internal failure costs
	Treating toxic waste	1,053,000	3.90
	Maintaining pollution equipment	297,000	1.10
	Total	1,350,000	5.00
External failure costs
	Cleaning up oil spills	1,836,000	6.80
	Cleaning up contaminated soil	3,429,000	12.70
	Total	5,265,000	19.50
Total Quality Cost		8,532,000	31.60

Environmental Cost % of Operating Costs = Environmental Cost ÷ Operating Cost × 100

Where

Operating Cost = $27000000 as given in the question