Deck 15: Sustainability

Question 1

________ 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

Answer 1

A

Question 2

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

Answer 2

C

Question 3

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

Answer 3

D

Question 4

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

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

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 7

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 8

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 9

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

Question 10

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 11

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 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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 19

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

Question 20

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

Question 21

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 with 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 $7.30 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)183%
D)55%

Question 22

A company can achieve cost savings by becoming more sustainable. Which of the following is an example of the way a company can reduce costs through sustainability?

A)Companies are attracting and retaining the best and brightest employees.
B)Companies cannot reduce costs in an effort to be sustainable because it is an expensive process.
C)Companies are providing sustainability reporting to be more transparent about their sustainability efforts.
D)Companies are using less packaging and materials in order to reduce waste.

Question 23

(Net present value table required)Lester 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 $275,000; however, Lester will save $55,000 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%?
Present Value of $1
Present Value of Annuity of $1

A)$195,745
B)-$195,745
C)$470,745
D)$275,000

Question 24

EPA stands for ___________ and is the regulatory agency that is charged with writing, implementing, and enforcing environmental laws passed by Congress.

A)Environment Press Authority
B)Environmental Permissions Act
C)Environmental Protection Agency
D)Environment and Planet Agency

Question 25

Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products. The average cost for sheet metal is $85 per ton. Gluck's waste disposal company charges $65 per ton to dispose of manufacturing waste. The stamping process currently employed by Gluck generates an average of 150 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 $33 per ton?

A)$176,400
B)$117,000
C)$12,750
D)$59,400

Question 26

Lester 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 $265,000; however, Lester will save $65,000 annually on its heating and cooling costs. The system has an expected life of 35 years. What is the payback period, in years, for the geothermal heat pump?

A)4)08 years
B)30.92 years
C)35.00 years
D)39.08 years

Question 27

A waste audit is best described by which of the following statements?

A)A study of operations to determine how to eliminate all waste a company produces.
B)A study of a company's waste to determine if it is really detrimental to the planet.
C)A study on how to turn a company into a paperless environment in order to reduce the amount of paper waste a company produces .
D)A study of the waste generated from operations and determining how the waste can be avoided as well as possible alternate uses for the waste.

Question 28

Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products. The average cost for sheet metal is $80 per ton. Gluck's waste disposal company charges $70 per ton to dispose of manufacturing waste. The stamping process currently employed by Gluck generates an average of 170 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 $50,000, but would reduce stamping waste by 50%, the remaining waste would be sold to a recycler for $35 per ton. What is the net savings if Gluck implements this new system?

A)$210,100
B)$260,100
C)$142,800
D)$35,700

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 $100 per ton. Gluck's waste disposal company charges $55 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)$223,200
B)$18,600
C)$144,000
D)$79,200

Question 30

Windy Industries, in Chicago, plans to take advantage of the winds blowing in from Lake Michigan. Windy 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 26 years. What is the payback period, in years, for the wind turbine?

A)8)77 years
B)17.23 years
C)26.00 years
D)34.77 years

Question 31

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 with 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 $7.40 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)$8487.35
B)$7408.65
C)$7948.00
D)$8317.15

Question 32

When a company makes purchasing decisions based on how well the suppliers manage the social and environment impact of their operations, the company is practicing ___________________.

A)common sense
B)supply-chain assessment
C)supplier scrutiny
D)due diligence

Question 33

(Net present value table required)Windy Industries, in Chicago, plans to take advantage of the winds blowing in from Lake Michigan. Windy 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 $550,000 and would provide a net cost savings of $62,000 per year. The turbine will have a life of 25 years. If Windy assigns a discount rate of 10% to this project, what is the net present value (NPV)of the wind turbine?
Present Value of $1
Present Value of Annuity of $1

A)$12,774
B)-$12,774
C)$1,112,774
D)$550,000

Question 34

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 35

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 $14,188, but will decrease variable cost per unit by $180. Rubber City expects to sell 770 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? (Round any intermediary calculations and your final answer to the nearest whole unit.)

A)(58)
B)58
C)238
D)(238)

Question 36

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 37

Which of the following is not considered as of the factors of the triple bottom line?

A)Profit
B)Productivity
C)People
D)Planet

Question 38

The term ________________ has been used to signify the economic savings achieved by producing goods and services with fewer ecological resources.

A)eco-efficiency
B)triple bottom line
C)waste audit
D)sustanability

Question 39

When a company has found an innovative way to reduce their waste sent to the landfill and generate income as well, this is an example of

A)increasing their market share.
B)generating new revenue streams.
C)improving external image.
D)reducing litigation risks.

Question 40

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 41

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 42

Sustainability reporting helps companies set goals, measure performance, and manage change as they move towards a more sustainable model of operations.

Question 43

Sustainability Accounting Standards Board (SASB)is attempting to standardize the sustainability reporting so that the reports are comparable between companies within the same industry.

Question 44

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

Question 45

The manager at Clean Oceans Unlimited, in Virginia, conducted a recent meeting with the operations manager to discuss the results of a recent waste audit conducted by the city officials and to develop a new sustainability strategy. The manager announced that the engineer has developed a system that filters the storm-water runoff into the canals that flow into the Chesapeake Bay. The cost of the new system is $5,500,000. The new system is expected to eliminate bacteria in run-off water and it is expected to reduce the level of water pollution that flows into the Chesapeake Bay. The new system is expected to generate taxes payable to the company of up to $2,500,000 in storm-water fees each year. The pump is expected to have a life of 20 years.
Compute the payback period, in years. With respect to the business, should the manager at Clean Oceans Unlimited implement this new sustainability strategy? Include a discussion about the three factors that relate to sustainability (environmental, economic, and social factors).

Question 46

Large corporations that do not issue sustainability reports are now in the minority.

Question 47

The Global Reporting Initiative has developed a framework for companies to use for sustainability reporting that is used worldwide.

Question 48

Core reports disclose at least one indicator related to each identified material aspect in the CSR report.

Question 49

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 $117,850, but will decrease variable cost per unit by $190. Rubber City expects to sell 650 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)$5,650
B)($5,650)
C)$194,600
D)($194,600)

Question 50

The city of Pittsburgh, Pennsylvania conducted a life-cycle assessment (LCA)and 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 require disposal at a special landfill at a total 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 Company 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 51

Sustainability reporting is now a required practice in the United States.

Question 52

Sea Escape Company sells condominiums in Florida. During the recession, the company moved its sales operations to an older building near the beach. The new sales office does not attract new clients and the company cannot retain its employees because the employees resign and they pursue employment at other organizations that offer professional, newer, office facilities. The sales manager conducted a meeting to discuss the business reasons for adopting sustainable business practices. The sales manager asked the operations manager for approval to update the old facilities. The sales manager estimates that the cost to update the building is $150,000. The sales manager estimates that if the proposal to update the old building is approved, the company can generate at least $80,000 in additional sales.
Compute the payback period, in years, to recover from the cost of renovations. List and discuss at least three business reasons for adopting sustainable business practices.

Question 53

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 require special disposal at a special landfill at a cost of $55,000. The city conducted a life-cycle assessment (LCA)and discovered that the city could reclaim the old woodwork, bricks of the historic homes, and repurpose the materials to use in a new construction project. The Old Crib Deconstruction Company submitted the lowest bid of $460,000 to properly dismantle the old homes. Construction Junction, which specializes in the sale of reclaimed building materials, has offered to purchase the materials for $345,000.
What is the net cost to repurpose the building materials?

A)$115,000
B)$60,000
C)$170,000
D)$345,000

Question 54

The new managerial accountant at the Recycle Shoppe proposed a method to eliminate waste, recycle a variety of products to enhance sales, and generate profits. The operations manager attended a meeting with the creative manager and proposed that the staff recycle the wood out of the 1,000 old chairs in the warehouse and convert the wood backing into custom picture frames. The operations manager stated that the old wooden chairs in the basement are a fire hazard. The managerial accountant believes that the cost to convert the old wood into custom picture frames is $80,000. The managerial accountant forecasts earnings from the sale of the custom picture frames at $54,000. Compute the payback period, in years. Which of the following illuminates both internal and external costs to give the manager a complete set of information about how to generate cost-effective solutions to environmental and social concerns?

A)1)68; internal costs
B)2)48; external costs
C)0)68; cost of goods sold
D)1)48; life-cycle assessment

Question 55

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 0.004 pounds by 15%, but will increase the overall cost of paper per pound from $1.25per pound to $1.3 per pound.
Beginning inventory for the year will be 240 pounds and desired ending inventory is 1200 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)1800 pounds
B)3000 pounds
C)11,160 pounds
D)1200 pounds

Question 56

The managerial accountant at the Export Shoppe attended a meeting with the facilities manager to discuss the internal and external costs during the quarter. The facilities manager provided the managerial accountant with the following cost worksheet that highlights the internal and external costs during the period: Export Shoppe
Cost Worksheet
Year Ending December 31, 2013
The managerial accountant reported that the total environmental costs are 20% of all costs during the year. Calculate the total environmental costs at the Export Shoppe.

A)$4400
B)$5500
C)$6200
D)$7460

Question 57

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 $13,904, but will decrease variable cost per unit by $180. 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? (Round any intermediary calculations to the nearest whole unit and your final answer to the nearest dollar.)

A)($83,160)
B)$83,160
C)($318,808)
D)$318,808

Question 58

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 0.006 pounds by 15%, but will increase the overall cost of paper per pound from $1.21 per pound to $1.3 per pound.
Beginning inventory for the year will be 260 pounds and desired ending inventory is 1700 pounds. Total production for the year is projected at 3,500,000 cups.
If Common Paper implements the new system, what is the expected cost savings for paper purchased during the year? (Do not round any intermediary calculations. Round your final answer to the nearest dollar.)

A)$2075
B)$27,152
C)$25,077
D)$52,229

Question 59

Comprehensive reports disclose all indicators related to each identified material aspect in the CSR report.

Question 60

Mr. Lite is an entrepreneur that builds and manages organic vegetables in the United States. Mr. Lite recently developed a sustainability strategy to build a large greenhouse and warehouse in a recessed area in North Carolina. The greenhouse is expected to produce organic vegetables and Mr. Lite can sell the organic vegetables to the state to feed homeless people at the local community centers in the state. This project is expected to generate a minimum of 100 full-time employees. The cost to build the new greenhouse is $10,000,000 and the food that is produced at the greenhouse is expected to generate $1,500,000 in payments from the state.
Compute the payback period, in years. Should Mr. Lite build the new greenhouse? Is the strategy to build the new greenhouse an effective sustainability strategy? Why or why not?

Question 61

All of the following are aspects of the subcategory "human rights" except

A)child labor.
B)emissions.
C)security practices.
D)non-discrimination.

Question 62

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

Question 63

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

Question 64

The G4 framework is organized around three categories. Which of the following is not one of those categories?

A)Economic
B)Internal affairs
C)Environmental
D)Social

Question 65

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 66

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 67

The social category in the G4 framework contains which 4 subcategories?

A)Society, environment, external reporting, and internal affairs
B)Labor practices, human rights, society, and product responsibility
C)External reporting, environmental impact, product responsibility, and internal affairs
D)None of these; there are only 3 subcategories

Question 68

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

Question 69

All of the following are aspects of the subcategory "labor practices and decent work" except

A)training and education.
B)employment.
C)occupational health and safety.
D)anti-corruption.

Question 70

Another name used to refer to sustainability reporting is

A)Corporate Social Responsibility report.
B)Environmental, Social, and Governance report.
C)Neither of these choices
D)Both A and B are correct

Question 71

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

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

Question 72

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

Question 73

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 74

Which of the following organizations has developed the G4 Guidelines?

A)Global Reporting Initiative (GRI)
B)International Accounting Standards Board (IASB)
C)Carbon Disclosure Project (CDP)
D)International Organization for Standardization (ISO)

Question 75

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

Question 76

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 77

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

Question 78

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

Question 79

All of the following are aspects of the subcategory "product responsibility" except

A)public policy.
B)product and service labeling.
C)customer privacy.
D)customer health and safety.

Question 80

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