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Environmental Costs
At the beginning of 2009, Kleaner Company initiated a program to improve its environmental performance. Efforts were made to reduce the production and emission of contaminating gaseous, solid, and liquid residues. By the end of the year, in an executive meeting, the environmental manager indicated that the company had made significant improvement in its environmental performance, reducing the emission of contaminating residues of all types. The president of the company was pleased with the reported success but wanted an assessment of the financial consequences of the environmental improve- ments. To satisfy this request, the following financial data were collected for 2008 and 2009 (all changes in costs are a result of environmental improvements):
Sales
20,000,000
Evaluating and selecting suppliers
0
600,000
Treating and disposing of toxic materials
1,200,000
800,000
Inspecting processes (environmental objective)
200,000
300,000
Land restoration (annual fund contribution)
1,600,000
Maintaining pollution equipment
400,000
Testing for contaminants
150,000
100,000
Required:
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