Environmental Financial Reporting, Ecoefficiency, Improving Environmental Performance The following items are listed in an environmental financial statement (issued as part of an environmental progress report): Environmental benefits (savings, income, and cost avoidance): Ozone-depleting substances cost reductions Hazardous waste disposal cost reductions Hazardous waste material cost reductions Nonhazardous waste disposal cost reductions Nonhazardous waste material cost reductions Recycling income Energy conservation cost savings Packaging cost reductions Environmental costs: Corporate-level administrative costs Auditor fees Environmental engineering Facility professionals and programs Packaging professionals and programs for packaging reductions Pollution controls: Operations and maintenance Pollution controls: Depreciation Attorney fees for cleanup claims, and notices of violations (NOVs) Settlements of government claims Waste disposal Environmental taxes for packaging Remediation/Cleanup: On-site Remediation/Cleanup: Off-site In the environmental benefits section of the report, three types of benefits are listed: income, savings, and cost avoidance. Now, consider the following data for selected items for a four-year period: Year Engineering Design Costs Cost of Ozone- Depleting Substances 20x2 $170,200 $3,230,200 20x3 1,444,100 2,167,400 20x4 709,900 1,457,500 20x5 88,900 355,400 The engineering design costs were incurred to redesign the production processes and products. Redesign of the product allowed the substitution of a material that produced less ozone-depleting substances. Modifications in the design of the processes also accomplished the same objective. Because of the improvements, the company was able to reduce the demand for pollution control equipment (with its attendant depreciation and operating costs) and avoid fines and litigation costs. All of the savings generated in a given year represent costs avoided for future years. The engineering costs are investments in design projects. Once the results of the project are realized, design costs can be reduced to lower levels. However, since some ongoing design activity is required for maintaining the system and improving it as needed, the environmental engineering cost will not be reduced lower than the $88,900 reported in 20x5. Required: 1. Prepare a partial environmental financial statement, divided into benefit and cost sections for 20x3, 20x4, and 20x5. Environmental Financial Statement (Partial) For 20x3, 20x4 and 20x5 20x3 20x4 20x5 Environmental benefits: Engineering design $fill in the blank $fill in the blank $fill in the blank Environmental costs: Ozone-depleting substances, cost reductions fill in the blank fill in the blank fill in the blank 2. Evaluate the outcomes. Does this result support or challenge ecoefficiency?

Environmental Financial Reporting, Ecoefficiency, Improving Environmental Performance The following items are listed in an environmental financial statement (issued as part of an environmental progress report): Environmental benefits (savings, income, and cost avoidance): Ozone-depleting substances cost reductions Hazardous waste disposal cost reductions Hazardous waste material cost reductions Nonhazardous waste disposal cost reductions Nonhazardous waste material cost reductions Recycling income Energy conservation cost savings Packaging cost reductions Environmental costs: Corporate-level administrative costs Auditor fees Environmental engineering Facility professionals and programs Packaging professionals and programs for packaging reductions Pollution controls: Operations and maintenance Pollution controls: Depreciation Attorney fees for cleanup claims, and notices of violations (NOVs) Settlements of government claims Waste disposal Environmental taxes for packaging Remediation/Cleanup: On-site Remediation/Cleanup: Off-site In the environmental benefits section of the report, three types of benefits are listed: income, savings, and cost avoidance. Now, consider the following data for selected items for a four-year period: Year Engineering Design Costs Cost of Ozone- Depleting Substances 20x2 $170,200 $3,230,200 20x3 1,444,100 2,167,400 20x4 709,900 1,457,500 20x5 88,900 355,400 The engineering design costs were incurred to redesign the production processes and products. Redesign of the product allowed the substitution of a material that produced less ozone-depleting substances. Modifications in the design of the processes also accomplished the same objective. Because of the improvements, the company was able to reduce the demand for pollution control equipment (with its attendant depreciation and operating costs) and avoid fines and litigation costs. All of the savings generated in a given year represent costs avoided for future years. The engineering costs are investments in design projects. Once the results of the project are realized, design costs can be reduced to lower levels. However, since some ongoing design activity is required for maintaining the system and improving it as needed, the environmental engineering cost will not be reduced lower than the $88,900 reported in 20x5. Required: 1. Prepare a partial environmental financial statement, divided into benefit and cost sections for 20x3, 20x4, and 20x5. Environmental Financial Statement (Partial) For 20x3, 20x4 and 20x5 20x3 20x4 20x5 Environmental benefits: Engineering design $fill in the blank $fill in the blank $fill in the blank Environmental costs: Ozone-depleting substances, cost reductions fill in the blank fill in the blank fill in the blank 2. Evaluate the outcomes. Does this result support or challenge ecoefficiency?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 41P: The following items are listed in an environmental financial statement (issued as part of an...

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Environmental Financial Reporting, Ecoefficiency, Improving Environmental Performance

The following items are listed in an environmental financial statement (issued as part of an environmental progress report):

Environmental benefits (savings, income, and cost avoidance):

Ozone-depleting substances cost reductions
Hazardous waste disposal cost reductions
Hazardous waste material cost reductions
Nonhazardous waste disposal cost reductions
Nonhazardous waste material cost reductions
Recycling income
Energy conservation cost savings
Packaging cost reductions

Environmental costs:

Corporate-level administrative costs
Auditor fees
Environmental engineering
Facility professionals and programs
Packaging professionals and programs for packaging reductions
Pollution controls: Operations and maintenance
Pollution controls: Depreciation
Attorney fees for cleanup claims, and notices of violations (NOVs)
Settlements of government claims
Waste disposal
Environmental taxes for packaging
Remediation/Cleanup: On-site
Remediation/Cleanup: Off-site

In the environmental benefits section of the report, three types of benefits are listed: income, savings, and cost avoidance. Now, consider the following data for selected items for a four-year period:

Year	Engineering Design Costs	Cost of Ozone- Depleting Substances
20x2		$170,200	$3,230,200
20x3		1,444,100	2,167,400
20x4		709,900	1,457,500
20x5		88,900	355,400

The engineering design costs were incurred to redesign the production processes and products. Redesign of the product allowed the substitution of a material that produced less ozone-depleting substances. Modifications in the design of the processes also accomplished the same objective. Because of the improvements, the company was able to reduce the demand for pollution control equipment (with its attendant depreciation and operating costs) and avoid fines and litigation costs. All of the savings generated in a given year represent costs avoided for future years. The engineering costs are investments in design projects. Once the results of the project are realized, design costs can be reduced to lower levels. However, since some ongoing design activity is required for maintaining the system and improving it as needed, the environmental engineering cost will not be reduced lower than the $88,900 reported in 20x5.

Required:

1. Prepare a partial environmental financial statement, divided into benefit and cost sections for 20x3, 20x4, and 20x5.


Environmental Financial Statement (Partial)
For 20x3, 20x4 and 20x5
	20x3	20x4	20x5
Environmental benefits:
Engineering design	$fill in the blank	$fill in the blank	$fill in the blank
Environmental costs:
Ozone-depleting substances, cost reductions	fill in the blank	fill in the blank	fill in the blank

2. Evaluate the outcomes. Does this result support or challenge ecoefficiency?

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