At the beginning of the year, Andrew Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data were collected for the current and preceding year:
$\begin{array}{lrr}
& \underline{\text {Preceding Year}}& \underline{\text {Current Year}}\
\text { Operating costs } & \$ 2,400,000 & \$ 2,400,000 \
\text { Training employees } & 30,000 & 48,000 \
\text { Inspecting processes } & 7,000 & 8,000 \
\text { Operating pollution control equipment } & 32,000 & 50,000 \
\text { Maintaining pollution equipment } & 60,000 & 28,000 \
\text { Developing environmental performance measures } & 10,000 & 12,000 \
\text { Cleaning up lake } & 36,000 & 24,000
\end{array}$
-Refer to the figure.For the current year,what percentage of operating costs are prevention costs?

Question

At the beginning of the year, Andrew Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data were collected for the current and preceding year:
$\begin{array}{lrr}
& \underline{\text {Preceding Year}}& \underline{\text {Current Year}}\
\text { Operating costs } & \$ 2,400,000 & \$ 2,400,000 \
\text { Training employees } & 30,000 & 48,000 \
\text { Inspecting processes } & 7,000 & 8,000 \
\text { Operating pollution control equipment } & 32,000 & 50,000 \
\text { Maintaining pollution equipment } & 60,000 & 28,000 \
\text { Developing environmental performance measures } & 10,000 & 12,000 \
\text { Cleaning up lake } & 36,000 & 24,000
\end{array}$ 
-Refer to the figure.For the current year,what percentage of operating costs are prevention costs?

Quizplus · Accepted Answer

Prevention costs include training employees, inspecting processes, and developing environmental performance measures. For the current year, these costs total $48,000 + $8,000 + $12,000 = $68,000. The percentage of operating costs that are prevention costs is ($68,000 / $2,400,000) * 100% = 2.83%. However, since none of the options match exactly, the closest option is 2.00%.

At the Beginning of the Year, Andrew Company Initiated an Environmental