Opie Corporation reported the following operating costs and environmental quality costs for the past four 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.
$$\begin{array}{l}
&\text { Quality Costs as }\
\text { Year } & \text { Operatine Casts } & \text { Percent of Operatine Casts } \
\hline 20 X 1 & \$ 3,000,000 & 25.0 \
20 X 2 & 3,100,000 & 23.0 \
20 X 3 & 3,200,000 & 21.0 \
20 X 4 & 3,300,000 & 20.0
\end{array}$$
-Refer to the figure.What is the change in environmental costs from 20X2 to 20X3?

Question

Quizplus · Accepted Answer

To find the change in environmental costs from 20X2 to 20X3, calculate the environmental costs for each year and then find the difference. For 20X2, the environmental costs are 23% of $3,100,000, which equals $713,000. For 20X3, the environmental costs are 21% of $3,200,000, which equals $672,000. The change is $713,000 - $672,000 = $41,000.

Opie Corporation Reported the Following Operating Costs and Environmental Quality