You are given the following environmental quality-related costs:

Employee training ........................................................................ $100,000
Product design ............................................................................... 140,000
Supplier certification ....................................................................... 40,000
Process inspection ........................................................................ 320,000
Depreciation—pollution-control equipment ............................ 400,000
Maintain pollution-control equipment ...................................... 200,000
Clean up polluted lake ................................................................. 500,000
Restore land after use ................................................................. 700,000
Property damage claim ............................................................... 600,000

Required

1. Prepare a COQ report of environmental management for the year. Determine subtotals for each of the four reporting categories, and express each subtotal as a percentage of total operating expenses ($10,000,000) for the year. 

2. Based on the report you prepare, what conclusions can you draw regarding the company’s environmental quality performance for the year?

3. Can you offer management suggestions for the design of an effective COQ reporting system for the environmental program? (That is, what would make for a good reporting system?)