Canary Corporation reported the following information related to the past three years. Assume that all environmental quality costs are variable and that all changes in the quality cost ratios are due to an environmental cost reduction program. $\begin{array}{rrr}&&\text { Quality Costs as }\
\text { Year } &\text { Operating Costs } &\text { Percent of Operating Costs }\
2018 & \$ 2,000,000 & 14.0 \
2019 & 2,100,000 & 12.0 \
2020 & 2,200,000 & 10.0
\end{array}$ What is the change in environmental costs from 2018 to 2019?
A)A decrease of $28,000
B)An increase of $28,000
C)An increase of $100,000
D)A decrease of $100,000

Question

Quizplus · Accepted Answer

To calculate the change in environmental costs from 2018 to 2019, first determine the environmental costs for each year by applying the percentage to the operating costs. For 2018, the environmental costs are 14% of $2,000,000, which equals $280,000. For 2019, the environmental costs are 12% of $2,100,000, which equals $252,000. The change from 2018 to 2019 is a decrease of $28,000 ($280,000 - $252,000).

Canary Corporation Reported the Following Information Related to the Past