Roberts 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. $\begin{array}{lcc}
\text { Year }&\text {Quality Costs as Operating Costs}&\text { Percentage of Operating Cost }\
20 X 1 & \$ 4,000,000 & 24.0 \
20 X 2 & 4,100,000 & 22.0 \
20 X 3 & 4,200,000 & 20.0 \
20 X 4 & 4.300,000 & 18.0
\end{array}$
What is the change in environmental costs from 20X1 to 20X2?

Question

Roberts 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. $\begin{array}{lcc}
\text { Year }&\text {Quality Costs as Operating Costs}&\text { Percentage of Operating Cost }\
20 X 1 & \$ 4,000,000 & 24.0 \
20 X 2 & 4,100,000 & 22.0 \
20 X 3 & 4,200,000 & 20.0 \
20 X 4 & 4.300,000 & 18.0
\end{array}$
 What is the change in environmental costs from 20X1 to 20X2?

Quizplus · Accepted Answer

The change in environmental costs from 20X1 to 20X2 is $66,000. This is calculated by multiplying the operating costs for 20X1 by the percentage of operating costs that are environmental quality costs for 20X1, and then subtracting the operating costs for 20X2 by the percentage of operating costs that are environmental quality costs for 20X2.

Roberts Corporation Reported the Following Operating Costs and Environmental Quality