Pinter Company had the following environmental activities and product information:

1. Environmental activity costs

Activity	Costs
Design products (to reduce pollution)	$ 81,000
Test for contamination	144,000
Treat toxic waste	450,000
Operate pollution control equipment	360,000

2. Driver data

	Solvent X	Solvent Y
Design hours	1,800	3,600
Testing hours	3,200	11,200
Pounds of waste	400	17,600
Machine hours	1,800	70,200

3. Other production data

	Solvent X	Solvent Y
Nonenvironmental production costs	$2,052,000	$5,436,000
Units produced	360,000	360,000

Required:

1. Calculate the activity rates that will be used to assign environmental costs to products.

Design products	$fill in the blank 1	per design hour
Testing		per test hour
Treating waste		per pound of waste
Operating equipment		per machine hour

2. Determine the unit environmental and unit costs of each product using ABC. If required, round your answers to the nearest cent.

Activities	Solvent X	Solvent Y
Unit environmental cost
Unit cost

3. What if the design costs increased to $171,000 and the cost of toxic waste decreased to $225,000? Assume that Solvent Y uses 1,800 out of 3,600 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 4,275 of 4,500 pounds of toxic waste. What is the new environmental cost for Solvent Y? If required, round your intermediate calculations and answer to the nearest cent.

Answer rating: 100% (QA)

In the similar way the cost for other activities will be computed as shown below 2 Using the rates i... View the full answer