ENVIRONMENTAL COST REPORT
At the end of 2007, Hender Chemicals began to implement an environmental quality management program. As a first step, it identified the following costs in its accounting records as environmentally related for the year just ended:
|
|
2007 |
|
Settling personal injury claims |
$1,200,000 |
|
Treating and disposing of toxic waste |
4,800,000 |
|
Cleanup of chemically contaminated soil |
1,800,000 |
|
Inspecting products and processes |
600,000 |
|
Operating pollution control equipment |
840,000 |
|
Licensing facilities for producing contaminants |
360,000 |
|
Evaluating and selecting suppliers |
120,000 |
|
Developing performance measures |
60,000 |
|
Recycling products |
75,000 |
Required:
1. Prepare an environmental cost report by category. Assume that total operating costs are $60,000,000. 2. Use a pie chart to illustrate the relative distribution percentages for each environmental cost category. Comment on what this distribution communicates to manager.