Question
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Activity-Based Environmental Cost Assignments Pinter Company had the following environmental activities and product information: 1. Environmental...
Activity-Based Environmental Cost Assignments
Pinter Company had the following environmental activities and product information:
1. Environmental activity costs
| Activity | Costs |
| Design products (to reduce pollution) | $ 129,600 |
| Test for contamination | 230,400 |
| Treat toxic waste | 720,000 |
| Operate pollution control equipment | 576,000 |
2. Driver data
| Solvent X | Solvent Y | |
| Design hours | 2,900 | 2,500 |
| Testing hours | 5,100 | 9,300 |
| Pounds of waste | 600 | 17,400 |
| Machine hours | 2,900 | 69,100 |
3. Other production data
| Solvent X | Solvent Y | |
| Nonenvironmental production costs | $1,692,000 | $4,068,000 |
| Units produced | 360,000 | 360,000 |
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 $219,600 and the cost of toxic waste decreased
to $360,000? Assume that Solvent Y uses 5,000 out of 10,000 design
hours. Also assume that waste is cut by 50 percent and that Solvent
Y is responsible for 6,840 of 7,200 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. Calculate the activity rates that will be used to assign environmental costs to products.
| Design products | $129600/5400 = 24 | per design hour |
| Testing | $230400/14400 = 16 | per test hour |
| Treating waste | $720000/18000 = 40 | per pound of waste |
| Operating equipment | $576000/72000 = 8 | 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 |
| Design products | 69600 | 60000 |
| Testing | 81600 | 148800 |
| Treating waste | 24000 | 696000 |
| Operating equipment | 23200 | 552800 |
| Total Cost | 198400 | 1457600 |
| Unit environmental cost | 360000 | 360000 |
| Unit cost | 0.55 | 4.05 |
3. What if the design costs increased to $219,600 and the cost of toxic waste decreased to $360,000? Assume that Solvent Y uses 5,000 out of 10,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 6,840 of 7,200 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.
| Activities | Solvent Y |
| Design products | 109800 |
| Testing | 148800 |
| Treating waste | 342000 |
| Operating equipment | 552800 |
| Total Cost | 1153400 |
| Unit environmental cost | 360000 |
| Unit cost | 3.20 |
ekkarill92 answered 2 years agoRelated Solutions
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs...
Pinter Company had the following environmental activities and
product information:
1. Environmental activity costs
Activity
Costs
Design products (to reduce pollution)
$ 72,000
Test for contamination
128,000
Treat toxic waste
400,000
Operate pollution control equipment
320,000
2. Driver data
Solvent X
Solvent Y
Design hours
1,600
800
Testing hours
2,800
3,600
Pounds of waste
300
7,700
Machine hours
1,600
30,400
3. Other production data
Solvent X
Solvent Y
Nonenvironmental production costs
$1,344,000
$1,952,000
Units produced
160,000
160,000
Required:
1. Calculate...
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs...
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
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