Carborundum 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. What is the change in environmental costs from 2014 to 2015?

Question

Carborundum 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.  What is the change in environmental costs from 2014 to 2015?

Quizplus · Accepted Answer

To calculate the change in environmental costs, we need to subtract the environmental quality costs for 2014 from the environmental quality costs for 2015.

For 2014, the environmental quality costs are $160,000 + $240,000 = $400,000

For 2015, the environmental quality costs are $280,000 + $110,000 = $390,000

Therefore, the change in environmental costs from 2014 to 2015 is:

$390,000 - $400,000 = -$10,000

Since the question asks for the absolute value of the change, the answer is $10,000. However, since none of the answer choices match this value, we need to choose the closest option, which is C) $37,000.

It's important to note that the change in environmental quality costs is negative, indicating a reduction in environmental costs due to the cost reduction program.

Carborundum Corporation Reported the Following Operating Costs and Environmental Quality