Deck 15: Sustainability

Question 1

Government grants and tax credits increase the costs of implementing sustainability measures.

Answer 1

False

Question 2

Integrating sustainable business practices may help to identify new revenue streams for an organization.

Answer 2

True

Question 3

There are several reasons an organization might pursue sustainable initiatives. At one organization, employees approached management about implementing green practices throughout the business. This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Answer 3

C

Question 4

Sustainability is an expense item only. An organization choosing sustainability will see reduced profits.

Question 5

When Doubletree Hotel in Oregon created a "green" floor, it saw decreased housekeeping costs, laundry costs, and personal consumables costs. This situation is an example of which type of reason to implement sustainable initiatives?

A)Stakeholder influence
B)Competitive strategy
C)Cost reduction
D)None of the above

Question 6

Environmental sustainability is the primary concern of which of the following types of organizations?

A)Large domestic corporations
B)Global service firms
C)Manufacturing firms
D)All organizations regardless of size, location, or sector

Question 7

Which of the following is not an example of a cost reduction reason to support environmental sustainability?

A)Utilizing tax credits to upgrade to more energy efficient windows
B)Encouraging hotel guests to turn off air-conditioning units when leaving their rooms
C)Requiring employees to print on both sides of a piece of paper
D)Installing motion sensing lights in restrooms

Question 8

Environmental sustainability should only be the concern of large multinational manufacturing corporations.

Question 9

There are several reasons an organization might pursue sustainable initiatives. "As a result of significant increase in the number of non-compliance notices it received in a recent year, an organization increased sustainability training and focused management attention on sustainability." This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Question 10

There are several reasons an organization might pursue sustainable initiatives. "A legislative act requires retailers to take back old batteries and electronic devices for recycling or reuse." This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Question 11

Sustainability considers not only the needs of the present generation, but also the needs of future generations.

Question 12

There are several reasons an organization might pursue sustainable initiatives. "An automobile manufacturer has committed to being the market leader in fuel economy with every new vehicle developed." This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Question 13

There are several reasons an organization might pursue sustainable initiatives. "A national hotel chain instituted a paper-saving program that reduced the cost of office paper purchased by 20% annually." This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Question 14

There are several reasons an organization might pursue sustainable initiatives. "Increasing pressure from customers has pushed a utility company to maintain average rates for electricity that are lower than the national average." This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Question 15

There are several reasons an organization might pursue sustainable initiatives. "Due to rising costs, a manufacturing firm has reduced the amount of plastic used in each of its products, which helps to keep down the cost of raw materials (plastics). The drop in plastic usage also reduces the amount of plastic sent to the landfill after consumer use." This situation is an example of which type of reason to implement sustainable initiatives?

A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy

Question 16

Implementing sustainable business practices may help an organization to grow its market share.

Question 17

For maximum impact, a firm should initially focus on pollution control and cleanup measures.

Question 18

________ may include shareholders, bankers, special interest groups, employees, policy makers, customers, suppliers, or community members.

A)Stakeholders
B)Regulations
C)Constraints
D)None of the above

Question 19

Which of the following is a reason an organization would pursue sustainability?

A)To improve its competitive position
B)To save money
C)To appease shareholders
D)All of the above

Question 20

Possible future liabilities related to pollution may negatively affect an organization's ability to access credit.

Question 21

Alexander Industries, in Chicago, plans to take advantage of the winds blowing in from Lake Michigan. Alexander is developing a project to install a wind turbine that would generate electricity and reduce energy costs. The turbine would have an initial cost of $500,000 and would provide a net cost savings of $57,000 per year. The turbine will have a life of 25 years. What is the payback period, in years, for the wind turbine?

A)8)77 years
B)9)08 years
C)25 years
D)28.75 years

Question 22

People's Public Power is an electric utility company. The new CEO is interested in implementing new projects that will not only benefit the environment, but will also benefit the company through cost savings. One of the proposed projects is to offer a paperless, online billing solution for its customers in Green Township. Preliminary market research indicates that participation in the paperless option will be between 20 - 30% of customers.
Total costs for the paperless system are projected to be $100,000 per quarter, which are comprised solely of fixed costs for IT personnel and computer hardware. The CEO has asked you to perform an analysis of the proposed paperless billing system.
Historical costs for the current paper-based system are as follows:
Requirements:
a. Using the historical costs calculate the variable costs per bill under the current system.
b. The company projects that next quarter 650,000 bills will be mailed to customers. What is the projected cost savings if the maximum number, 30%, of customers choose the paperless system?
c. What is the projected cost savings if the minimum number, 20%, of customers choose the paperless system?

Question 23

The city of Pittsburgh, Pennsylvania is reviewing proposals for the demolition of historic, but dilapidated, homes in its "Old East End" neighborhood. The homes, many dating back 150 years, contain lead paint, lead pipes, and asbestos insulation that must be taken to a special landfill at a cost of $50,000 per house. A second option for the city is to reclaim the old woodwork, and bricks of the historic homes and repurpose the materials for use in new construction. This Old Crib Deconstruction submitted the lowest bid of $450,000 to properly dismantle the old homes. Construction Junction, which specializes in the sale of reclaimed building materials, has offered to purchase the materials for $375,000.
What is the net cost to repurpose the building materials?

A)$75,000
B)$25,000
C)$125,000
D)$375,000

Question 24

Alexander Industries, in Chicago, plans to take advantage of the winds blowing in from Lake Michigan. Alexander is developing a project to install a wind turbine that would generate electricity and reduce energy costs. The turbine would have an initial cost of $500,000 and would provide a net cost savings of $57,000 per year. The turbine will have a life of 25 years. If Alexander assigns a discount rate of 10% to this project, what is the net present value (NPV)of the wind turbine?

A)$17,389
B)$(494,756)
C)$517,389
D)$5,244

Question 25

A common definition of ________ is the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

A)environmental management accounting
B)sustainability
C)triple bottom line
D)carbon footprint

Question 26

Common Paper Supply produces paper cups for a national chain of coffee shops. Twenty-five percent of the paper used to produce the cups comes from post-consumer (recycled)paper. This satisfies the demands of the national coffee chain, which, for public relations reasons, requires a certain percentage of recycled content. Common Paper has developed a new method that will allow it to increase the percentage of post-consumer material per cup, while reducing the total paper needed per cup. This is a selling feature for the coffee chain and also reduces Common Paper's costs.
The proposed method will reduce the total quantity of paper required per cup of .004 pounds by 15%, but will increase the overall cost of paper per pound from $1.20 per pound to $1.30 per pound. The new method also requires a one-time charge of $9,000 for re-tooling.
Beginning inventory for the year will be 240 pounds and desired ending inventory is 1,200 pounds. Total production for the year is projected at 3,000,000 cups.
If Common Paper implements the new system, what is the expected reduction in the quantity of paper that will need to be purchased?

A)1,800 pounds
B)2,500 pounds
C)9,000 pounds
D)1,200 pounds

Question 27

R-Cubed manufactures custom playground equipment from recycled plastics for city school districts. The school districts are required to use a certain percentage of recycled materials to comply to its state grants. As a result, R-Cubed tracks both virgin (non-recycled)and recycled materials used to manufacture its playground equipment. R-Cubed uses a predetermined manufacturing overhead rate of $7.00 per direct labor hour.
Here is a summary of the materials and labor used on a recent job for Stow City Schools:
Calculate the total cost of the Stow City job.

A)$7,930
B)$7,480
C)$7,280
D)$7,790

Question 28

Rubber City Cycles manufactures carbon fiber bicycle frames for professional racing and avid amateur cyclists. Rubber City has found a CNC (computer numerical control)machine that will significantly reduce manufacturing waste while improving the quality of the frames. The new CNC machine will increase annual fixed costs by $13,750, but will decrease variable cost per unit by $150. Rubber City expects to sell 750 frames next year. Annual data for the current system are as follows:
By what amount will the breakeven point in dollars increase (decrease)if Rubber City purchases the new CNC machine?

A)($62,500)
B)$62,500
C)($312,500)
D)$312,500

Question 29

Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products. The average cost for sheet metal is $75 per ton. Gluck's waste disposal company charges $50 per ton to dispose of manufacturing waste. The stamping process currently employed by Gluck generates an average of 120 tons of waste per month. Gluck has developed a new system that would increase the efficiency of its stamping process. The new system has an annual cost of $45,000, but would reduce stamping waste by 50%, the remaining waste would be sold to a recycler for $30 per ton. What is the net savings if Gluck implements this new system?

A)$102,600
B)$147,600
C)$72,000
D)$21,600

Question 30

Serenity Now Industries manufactures custom fiberglass hulls for luxury yachts and pleasure boats. The current cost accounting system uses machine hours to allocate manufacturing overhead to each job. Serenity estimates that in the coming year it will incur $600,000 in manufacturing overhead costs and use 8,000 machine hours.
Depending on the specifications requested by the customer, the hull may use hazardous chemicals that incur greater disposal costs. Serenity's traditional accounting system includes the cost of hazardous waste disposal in with total manufacturing overhead. Serenity is planning to implement an activity based costing system to more accurately assign hazardous waste disposal costs to each job.
Expected usage and costs for manufacturing overhead are as follows:
During the year, Yacht #633 was started and completed:
Requirements:
a. Calculate the cost of Yacht #633 using the Serenity's current method of allocating manufacturing overhead.
b. Calculate the cost of Yacht #633 using the proposed activity based costing system. How is this information useful to an environmental management accounting (EMA)system?

Question 31

Rubber City Cycles manufactures carbon fiber bicycle frames for professional racing and avid amateur cyclists. Rubber City has found a CNC (computer numerical control)machine that will significantly reduce manufacturing waste while improving the quality of the frames. The new CNC machine will increase annual fixed costs by $13,750, but will decrease variable cost per unit by $150. Rubber City expects to sell 750 frames next year. Annual data for the current system are as follows:
By what amount will the breakeven point in units increase (decrease)if Rubber City purchases the new CNC machine?

A)(50)
B)50
C)250
D)(250)

Question 32

R-Cubed manufactures custom playground equipment from recycled plastics for city school districts. The school districts are required to use a certain percentage of recycled materials to comply to its state grants. As a result, R-Cubed tracks both virgin (non-recycled)and recycled materials used to manufacture its playground equipment. R-Cubed uses a predetermined manufacturing overhead rate of $7.00 per direct labor hour.
Here is a summary of the materials and labor used on a recent job for Stow City Schools:
Calculate the percentage of recycled-content used in the Stow City Schools job (using pounds).

A)65%
B)35%
C)186%
D)54%

Question 33

Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products. The average cost for sheet metal is $75 per ton. Gluck's waste disposal company charges $50 per ton to dispose of manufacturing waste. The stamping process currently employed by Gluck generates an average of 120 tons of waste per month. What is the net amount Gluck would save per year if stamping waste could be sold to a recycler for $30 per ton?

A)$115,200
B)$9,600
C)$72,000
D)$43,200

Question 34

Common Paper Supply produces paper cups for a national chain of coffee shops. Twenty-five percent of the paper used to produce the cups comes from post-consumer (recycled)paper. This satisfies the demands of the national coffee chain, which, for public relations reasons, requires a certain percentage of recycled content. Common Paper has developed a new method that will allow it to increase the percentage of post-consumer material per cup, while reducing the total paper needed per cup. This is a selling feature for the coffee chain and also reduces Common Paper's costs.
The proposed method will reduce the total quantity of paper required per cup of .004 pounds by 15%, but will increase the overall cost of paper per pound from $1.20 per pound to $1.30 per pound. The new method also requires a one-time charge of $9,000 for re-tooling.
Beginning inventory for the year will be 240 pounds and desired ending inventory is 1,200 pounds. Total production for the year is projected at 3,000,000 cups.
If Common Paper implements the new system, what is the expected cost savings for paper purchased during the year?

A)$1,044
B)$15,552
C)$14,508
D)$45,000

Question 35

The city of Pittsburgh, Pennsylvania is reviewing proposals for the demolition of historic, but dilapidated, homes in its "Old East End" neighborhood. The homes, many dating back 150 years, contain lead paint, lead pipes, and asbestos insulation that must be taken to a special landfill at a cost of $50,000. A second option for the city is to reclaim the old woodwork, and bricks of the historic homes and repurpose the materials for use in new construction. This Old Crib Deconstruction submitted the lowest bid of $450,000 to properly dismantle the old homes. Construction Junction, which specializes in the sale of reclaimed building materials, has offered to purchase the materials for $375,000.
Which of the following is a qualitative factor that Pittsburgh should consider in its analysis?

A)Repurposing the building materials will reduce hazardous waste entering landfills.
B)The cost to recycle the building materials is $25,000 greater than the cost to dispose of the materials.
C)The price offered by Construction Junction may be too low given the cost to deconstruct the buildings.
D)The bid submitted by This Old Crib is too high for the prevailing economic conditions.

Question 36

Simon Manufacturing is conducting preliminary research into installing a geothermal heat pump to heat and cool its factories and offices. The initial cost of installing the new system is $245,000; however, Simon will save $35,000 annually on its heating and cooling costs. The system has an expected life of 15 years. What is the payback period, in years, for the geothermal heat pump?

A)7)00 years
B)4)49 years
C)25 years
D)8)56 years

Question 37

For maximum effectiveness sustainable strategies are often implemented at which stage of an organization's value chain?

A)Design
B)Production
C)Distribution
D)Research

Question 38

Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products. The average cost for sheet metal is $75 per ton. Gluck's waste disposal company charges $50 per ton to dispose of manufacturing waste. The stamping process currently employed by Gluck generates an average of 120 tons of waste per month. What is the annual cost of stamping waste, including both the materials cost and the disposal cost?

A)$180,000
B)$15,000
C)$108,000
D)$72,000

Question 39

Simon Manufacturing is conducting preliminary research into installing a geothermal heat pump to heat and cool its factories and offices. The initial cost of installing the new system is $245,000; however, Simon will save $35,000 annually on its heating and cooling costs. The system has an expected life of 15 years. What is the net present value (NPV)of the project, assuming a discount rate of 8%?

A)$54,565
B)$(233,975)
C)$299, 565
D)$11,025

Question 40

Rubber City Cycles manufactures carbon fiber bicycle frames for professional racing and avid amateur cyclists. Rubber City has found a CNC (computer numerical control)machine that will significantly reduce manufacturing waste while improving the quality of the frames. The new CNC machine will increase annual fixed costs by $13,750, but will decrease variable cost per unit by $150. Rubber City expects to sell 750 frames next year. Annual data for the current system are as follows:
By what amount will Rubber City's operating income increase (decrease)if they purchase the new CNC machine?

A)$98,750
B)($98,750)
C)$312,500
D)($312,500)

Question 41

Which of the following items is most likely to be found on an environmental management accounting report?

A)CEO's salary
B)Public accounting firm's fee for doing financial accounting audit
C)Ratio of recycled trash to total trash
D)Regional sales revenue

Question 42

The total volume of water use associated with the processes and products of a business is

A)usage footprint.
B)waste footprint.
C)trash footprint.
D)water footprint.

Question 43

Materials flow accounting (MFA)reconciles physical output with all physical inputs.

Question 44

Which of the following organizations conducts an annual information Request survey in which environmental impact information is disclosed?

A)The Carbon Disclosure Project (CDP)
B)The International Accounting Standards Board (IASB)
C)Accounting for Sustainability (A4S)
D)The International Organization for Standardization (ISO)

Question 45

Which of the following items represent monetary information in an environmental management accounting system?

A)Cost of coffee in break room
B)Cost of sulfur used in erasers
C)Cost of wages for secretaries
D)Cost of wages for quality control inspector

Question 46

Currently, the SEC does not require publicly-held corporations to disclose the costs related to remediation of contaminated sites.

Question 47

Which of the following organizations has developed a Connected Reporting Framework (CRF)to be used to provide information for internal and external use?

A)Accounting for Sustainability (A4S)Project
B)International Accounting Standards Board (IASB)
C)Carbon Disclosure Project (CDP)
D)International Organization for Standardization (ISO)

Question 48

Environmental management accounting (EMA)utilizes three types of information for internal decision making.

Question 49

The categories of costs collected by an EMA system are similar to the costs collected by traditional accounting systems.

Question 50

The "triple bottom line" reports on three factors: profits, people, and planet.

Question 51

Physical information has not been a traditional component of managerial accounting systems.

Question 52

Materials costs of product outputs category is similar to indirect materials since it becomes part of the final product.

Question 53

Which of the following items do not represent monetary information in an environmental management accounting system?

A)Cost to upgrade factory equipment to reduce emissions
B)Cost of hiring workers to comply with new EPA standard
C)Cost of secretarial services
D)Cost of materials used in lab to neutralize toxins

Question 54

Which of the following items represent physical information in an environmental management accounting system?

A)Total electricity used
B)Cost of electricity used to run plant
C)Cost of materials used in lab to neutralize toxins
D)Cost of shipping containers to customers

Question 55

The role of accounting in sustainability is limited to mandatory external reporting.

Question 56

A ________ is a measure of the total emissions of carbon dioxide and other greenhouse gases.

A)carbon footprint
B)waste footprint
C)carbon mark
D)water footprint

Question 57

Which of the following items does not represent physical information in an environmental management accounting system?

A)Pounds of cardboard recycled
B)Energy costs incurred to cool production equipment
C)Tons of garbage recycled
D)Gallons of waste water generated

Question 58

All of the following represent monetary information in an environmental management accounting system except

A)cost of lumber used in tables.
B)wages of workers needed to comply with new EPA standards.
C)gallons of wastewater generated.
D)cost to upgrade factory to reduce emissions.

Question 59

Which of the following items does not represent physical information in environmental management accounting system?

A)Tons of scrap metal recycled
B)Kilowatt hours of electricity used
C)Gallons of toxic waste generated
D)Cost of sulfur used in erasers

Question 60

The total amount of water consumed by an organization is an example of physical information that may be collected by an EMA.

Question 61

Communication between environmental, production, and accounting staff is crucial for an EMA system to function effectively.

Question 62

The cost to a corporation's image and goodwill as a result of an oil spill would be categorized as what type of cost by an environmental management accounting system (EMA)?

A)Intangible cost
B)Prevention cost
C)Waste and emission control cost
D)Materials cost of production outputs

Question 63

Traditional performance management systems can be adapted to include measures of environmental costs, savings, and liabilities. Revenue received from recycling scrap metal at a manufacturing plant is an example of a key performance indicator (KPI)classified under which perspective of the balanced scorecard?

A)Financial perspective
B)Customer perspective
C)Internal business perspective
D)Learning and growth perspective

Question 64

The system used for the identification, collection, analysis, and use of monetary and physical information is known as?

A)Environmental management accounting (EMA)
B)Materials flow accounting (MFA)
C)Triple bottom line
D)Sustainability

Question 65

The cost of water used to cool steel beams at a steel mill would be categorized as what type of cost by an environmental management accounting system (EMA)?

A)Materials cost of non-product outputs
B)Materials cost of product outputs
C)Waste and emission control cost
D)Intangible cost

Question 66

What are the three elements of the "triple bottom line"?

A)Profit, people, and planet
B)Profit, product, and process
C)Property, plant, and equipment
D)Planet, product, and people

Question 67

Traditional performance management systems can be adapted to include measures of environmental costs, savings, and liabilities. The percentage of employees participating in a diabetes walk is an example of a key performance indicator (KPI)classified under which perspective of the balanced scorecard?

A)Learning and growth perspective
B)Customer perspective
C)Internal business perspective
D)Community perspective

Question 68

Which of the following items represents monetary information in an environmental management accounting system?

A)Kilowatt hours of electricity used
B)Cost of upgrading factory equipment to reduce emissions
C)Ratio of recycled trash to total trash
D)Cost of janitorial services in office

Question 69

Traditional performance management systems can be adapted to include measures of environmental costs, savings, and liabilities. The number of local, organic products available at a grocery store is an example of a key performance indicator (KPI)classified under which perspective of the balanced scorecard?

A)Learning and growth perspective
B)Community perspective
C)Internal business perspective
D)Financial perspective

Question 70

The cost of monitoring pollutants in the wastewater discharged from a manufacturing plant would be categorized as what type of cost by an environmental management accounting system (EMA)?

A)Prevention cost
B)Waste and emission control cost
C)Intangible cost
D)Research and development cost

Question 71

Sustainability is concerned not only with the impact on the environment, but also with the impact on people and profit. The "triple bottom line" measures an entity's impact on profit, people, and planet. A manufacturing firm that realized a 10% increase in total shareholder return is impacting which element of the triple bottom line?

A)Profit
B)People
C)Planet
D)None of the above

Question 72

The cost of fabric to produce reusable grocery bags would be categorized as what type of cost by an environmental management accounting system (EMA)?

A)Materials cost of product outputs
B)Materials cost of non-product outputs
C)Waste and emissions cost
D)Prevention cost

Question 73

Traditional performance management systems can be adapted to include measures of environmental costs, savings, and liabilities. The number of training seminars related to sustainability offered by a company is an example of a key performance indicator (KPI)classified under which perspective of the balanced scorecard?

A)Learning and growth perspective
B)Customer perspective
C)Internal business perspective
D)Financial perspective

Question 74

Sustainability is concerned not only with the impact on the environment, but also with the impact on people and profit. The "triple bottom line" measures an entity's impact on profit, people, and planet. A Fortune 500 company that encourages its employees to use reusable mugs as opposed to styrofoam cups is impacting which element of the triple bottom line?

A)Profit
B)People
C)Planet
D)None of the above

Question 75

Sustainability is concerned not only with the impact on the environment, but also with the impact on people and profit. The "triple bottom line" measures an entity's impact on profit, people, and planet. A local accounting firm that participates in Habitat for Humanity is impacting which element of the triple bottom line?

A)Profit
B)People
C)Planet
D)None of the above

Question 76

Which of the following organizations are continually working to develop and improve environmental reporting standards?

A)IASB
B)A4S
C)ISO
D)All of the above

Question 77

The costs incurred by a manufacturer of lawn mowers to develop a method to reduce carbon dioxide emissions from its products would be categorized as what type of cost by an environmental management accounting system (EMA)?

A)Research and development cost
B)Waste and emission control cost
C)Prevention cost
D)Materials cost of product output

Question 78

The cost to install equipment to reduce the emissions of a coal-fired power plant would be categorized as what type of cost by an environmental management accounting system (EMA)?

A)Waste and emission control cost
B)Prevention cost
C)Intangible cost
D)Research and development cost

Question 79

An EMA system must make visible the environmental costs hidden in overhead by a traditional accounting system.

Question 80

Traditional performance management systems can be adapted to include measures of environmental costs, savings, and liabilities. The amount of electricity used by an oil refinery is an example of a key performance indicator (KPI)classified under which perspective of the balanced scorecard?

A)Financial perspective
B)Customer perspective
C)Internal business perspective
D)Community perspective