Cost management HM cost 3e CLE ch14

CHAPTER 14
Quality and Environmental Cost Management
COLLABORATIVE LEARNING EXERCISE
OBJECTIVE 5
During the past four years, Monticello Company has made significant efforts to improve its
environmental performance. Two of the strategic objectives that have received considerable
attention are those of minimizing hazardous materials and minimizing release of liquid
residues. Actually, two objectives are associated with hazardous waste. First, the company
wants to reduce the amount produced. Second, the company wants to shift the ways of
dealing with hazardous waste from landfill and deep well injections to such methods as
incineration, treatment, and recycling. Lori Anders, president of Monticello, also required the
Accounting Department to track and report on environmental progress. Internal and external
environmental progress reports are prepared. The following data pertain to the two strategic
objectives that have been emphasized.
Hazardous waste objective (measure is in tons):
Year
2010
2011
2012
2013

Incinerated
2,000
4,000
8,000
15,000

Treated
2,000
2,000
3,000

3,000

Recycled
1,000
2,000
3,000
3,500

Landfilled
35,000
30,000
25,000
15,000

Injection
10,000
10,000
7,000
3,500

Total
50,000
48,000
46,000
40,000

Liquid residue objective:
Year
2010
2011

2012
2013

Tons of Sulfates
100
92
81
73

The cost of landfilling hazardous waste is $50 per ton; injection is $60 per ton;
incineration is $70 per ton; treatment is $100 per ton; and recycling produces a benefit of $10
per ton. Recycling, however, can be done only for a certain type of hazardous waste and only
with a 70 percent successful yield. Treatment is also limited to certain types of waste. Fines,
pollution control equipment, and expected cleanup costs are $4,000 per ton for the liquid
residues.
Required:
Form groups of three to five members, where the total number of groups is at least four.
Assign the letters A through D to each group. Groups with the A designation will solve
Requirement 1, B will solve Requirement 2, C will solve Requirement 3, and D will solve
Requirement 4. The groups will then share their answers with the other groups.
1. Prepare a bar graph for hazardous waste that shows trends. Comment on the progress
revealed.

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2. Prepare a pie chart for hazardous waste for the years 2010 and 2013. Comment on the
progress in reducing reliance on landfills and injections.
3. Prepare a bar graph for the liquid residue.

4. Calculate the environmental cost for hazardous waste and liquid residue in 2010 and
2013. Comment on environmental progress as measured by the financial outcomes. Is
it possible that the savings are understated? Explain.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.