Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.34AE
Sustainability and
SUSTAINABILITY
Revol Industries manufactures plastic bottles for the food industry. On average, Revol pays $76 per ton for its plastics. Revol’s waste-disposal company has increased its waste-disposal charge to $57 per ton for solid and inert waste. Revol generates a total of 500 tons of waste per month.
Revol’s managers have been evaluating the production processes for areas to cut waste. In the process of making plastic bottles, a certain amount of machine “drool” occurs.
Machine drool is the excess plastic that drips off the machine between molds. In the past, Revol has discarded the machine drool. In an average month, 180 tons of machine drool is generated.
Management has arrived at three possible courses of action for the machine drool issue:
- 1. Do nothing and pay the increased waste-disposal charge.
- 2. Sell the machine drool waste to a local recycler for $18 per ton.
- 3. Reengineer the production process at an annual cost of $55,000. This change in the production process would cause the amount of machine drool generated to be reduced by 50% each month. The remaining machine drool would then be sold to a local recycler for $18 per ton.
Requirements
- 1. What is the annual cost of the machine drool currently? Include both the original plastic cost and the waste-disposal cost.
- 2. How much would the company save per year (net) if the machine drool were to be sold to the local recycler?
- 3. How much would the company save per year (net) if the production process were to be reengineered?
- 4. What do you think the company should do? Explain your rationale.
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Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company's operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities:
Initial Added Cost
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$ 5,000
$0.10 per lb. of recycled material
$0.15 per lb. of recycled material
Add solar panels as a source of power
700,000
$ 1,000 per year
$ 33,000 per year
Replace assembly room light fixtures with natural light
120,000
$ 180 per month
$ 220 per month
The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect.
a. Identify which CSR activities Green Manufacturing should…
Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company's operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities:
Initial Added Cost
Variable Cost
Variable Savings
Recycle and reuse production materials
$ 5,000
$0.10 per lb. of recycled material
$0.15 per lb. of recycled material
Add solar panels as a source of power
700,000
$ 1,000 per year
$ 33,000 per year
Replace assembly room light fixtures with natural light
120,000
$ 180 per month
$ 220 per month
The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect.
a. Identify which CSR activities Green Manufacturing should…
Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The company's operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities:
Initial Added Cost
Variable Cost
Variable Savings
Recycle and reuse production materials
$ 5,000
$0.10 per lb. of recycled material
$0.15 per lb. of recycled material
Add solar panels as a source of power
700,000
$ 1,000 per year
$ 33,000 per year
Replace assembly room light fixtures with natural light
120,000
$ 180 per month
$ 220 per month
The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect.
a. Identify which CSR activities Green Manufacturing should…
Chapter 5 Solutions
Managerial Accounting (5th Edition)
Ch. 5 - (Learning Objective 1) Which of the following is...Ch. 5 - (Learning Objective 2) Conversion costs consist of...Ch. 5 - (Learning Objective 2) Which of the following is...Ch. 5 - (Learning Objective 3) Which of the following is...Ch. 5 - Prob. 5QCCh. 5 - (Learning Objective 4) The journal entry needed to...Ch. 5 - (Learning Objective 4) A company has two...Ch. 5 - Prob. 8QCCh. 5 - Prob. 9QCCh. 5 - Prob. 10QC
Ch. 5 - Compare job costing and process costing (Learning...Ch. 5 - Prob. 5.2SECh. 5 - Prob. 5.3SECh. 5 - Determine the physical flow of units (process...Ch. 5 - Compute equivalent units (process costing Step 2)...Ch. 5 - Compute equivalent units (process costing Step 2)...Ch. 5 - Summarize total costs to account for (process...Ch. 5 - Prob. 5.8SECh. 5 - Prob. 5.9SECh. 5 - Prob. 5.10SECh. 5 - Prob. 5.11SECh. 5 - Prob. 5.12SECh. 5 - Prob. 5.13SECh. 5 - Prob. 5.14SECh. 5 - Prob. 5.15SECh. 5 - Prob. 5.16SECh. 5 - Continuation of S5-16: Record journal entry and...Ch. 5 - Compute equivalent units in second department...Ch. 5 - Prob. 5.19SECh. 5 - Prob. 5.20SECh. 5 - Prob. 5.21SECh. 5 - Prob. 5.22SECh. 5 - Analyze flow of costs through inventory T-accounts...Ch. 5 - Summarize physical units and compute equivalent...Ch. 5 - Prob. 5.25AECh. 5 - Prob. 5.26AECh. 5 - Continuation of E5-26A: Journal entries (Learning...Ch. 5 - Complete the production cost report in first...Ch. 5 - Prob. 5.29AECh. 5 - Analyze costs and gross profit in a process...Ch. 5 - Prob. 5.31AECh. 5 - Compute equivalent units and assign costs...Ch. 5 - Complete five-step procedure in first department...Ch. 5 - Sustainability and process costing (Learning...Ch. 5 - Complete five-step procedure and journalize result...Ch. 5 - Complete five-step procedure in second department...Ch. 5 - Exercises Group B E5-37B Analyze flow of costs...Ch. 5 - Summarize physical units and compute equivalent...Ch. 5 - Prob. 5.39BECh. 5 - Complete five-step procedure in first department...Ch. 5 - Prob. 5.41BECh. 5 - Prob. 5.42BECh. 5 - Prob. 5.43BECh. 5 - Prob. 5.44BECh. 5 - Record journal entries (Learning Objective 4)...Ch. 5 - Compute equivalent units and assign costs...Ch. 5 - Prob. 5.47BECh. 5 - Sustainability and process costing (Learning...Ch. 5 - Complete five-step procedure and journalize result...Ch. 5 - Complete five-step procedure in second department...Ch. 5 - Process costing in a single processing department...Ch. 5 - Process costing in a first department (Learning...Ch. 5 - Prob. 5.53APCh. 5 - Prepare a production cost report and journal...Ch. 5 - Prob. 5.55APCh. 5 - Process costing in a single processing department...Ch. 5 - Process costing in a first department (Learning...Ch. 5 - Prob. 5.58BPCh. 5 - Prepare a production cost report and journal...Ch. 5 - Prob. 5.60BPCh. 5 - Prob. 5.61SCCh. 5 - Discussion Questions 1. What characteristics of...Ch. 5 - Prob. 5.63ACTCh. 5 - Prob. 5.64ACTCh. 5 - Process costing and hybrid costing issues...
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