Question

AMC plc is examining its spending on environment-related activities for the current year. It has collected its environmental spending as follows: environmental training courses, £300,000; obtaining ISO environmental certifications, £500,000; environmental auditing, £350,000; performing contamination tests, £250,000; disposing toxic materials, £800,000; cleaning up contaminated soil £5,000,000, and land restoration, £4,000,000. Next year, AMC plans to increase its spending on training activities by 50 per cent. This increased spending will prevent the use of toxic materials to some extent, which will reduce the costs of performing contamination tests to £150,000 and lead to reduction in toxic materials disposal costs by half. The cleaning up contaminated soil will be reduced by 60 per cent and land restoration costs by 25 per cent. The rest of costs will remain the same. The forecasted sales revenue for the next year is £500million.

The finance director is due to attend next week’s board of directors meeting to discuss the next year’s planned environment-related spending. You are asked by the finance director to prepare an Environment Cost Management report, in which you should present the above information in clear categorised format, and justify the overall position as well as the planned increases in trainings.

Showing your workings and rounding up to 2 decimal places.

Answer 1

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