: chapter16ppts environ cost

7/29/2019 : Chapter16PPTs environ cost

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HANSEN & MOWEN

Cost ManagementACCOUNTING AND CONTROL


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Environmental Costs:Measurement and Control

16


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Ecoefficiencyessentiallymaintains that organizations

can produce more useful

goods and services while

simultaneously reducing

negative environmental

impacts, resource

consumption, and costs.

Defining, Measuring, and Controlling

Environmental Costs 1


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The Ecoefficiency Paradigm

(1) Reduce the consumption of

resources

(2) Reduce the environmental impact

(3) Increase product value

(4) Reduce environmental liability




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Ecoefficiency Relationships



continued


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Ecoefficiency Relationships



continued


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Environmental costsare costs that are incurredbecause poor environmental quality exists or mayexist.



Environmental costscan be classified infour categories:prevention costs,detection costs,

internal failure costs,and external failurecosts.


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Classification of Environmental Costs by Activity



Prevention Activities

Evaluating and selecting suppliers

Evaluating and selecting pollution

control equipmentDesigning processes

Designing products

Carrying out environmental studies

Auditing environmental risks

Developing environmental management

systems

Recycling products

Obtaining ISO 14001 certification


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Detection Activities

Auditing environmental activities

Inspecting products and processes

Developing environmental performancemeasures

Testing for contamination

Verifying supplier environmental

performance

Measuring contamination levels


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Internal Failure Activities

Operating pollution control equipment

Treating and disposing of toxic waste

Maintaining pollution equipmentLicensing facilities for producing

contaminants

Recycling scrap


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External Failure Activities

Cleaning up a polluted lake

Cleaning up oil spills

Cleaning up contaminated soilSettling personal injury claims

(environmentally related)

Restoring land to natural state

Losing sales due to poor environmental

reputation

continued


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External Failure Activities

Receiving medical care due to polluted

air

Losing employment because ofcontamination

Losing a lake for recreational use

Damaging ecosystems from solid waste

disposal

Societalcosts


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Environmental Cost Report




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Relative Distribution: Environmental Costs




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Environmental Financial Statement



continued


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Environmental Financial Statement




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Unit-Based Environmental Cost Assignments

Environmental costs are separated into a cost

pool

Costs are assigned to individual products usingunit-level drivers

Best for a homogeneous product setting

Environmental Costing 2


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ABC Environmental Costing

Environmental Costing 2


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Life cycle assessmentidentifies the environmental

consequences of a product

through its entire life cycle andthen searches for

opportunities to obtain

environmental improvements.

Life-Cycle Cost Assessment 3


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16-20Controlled by Customer

DisposalRecycling

Product Use

and

Maintenance

Packaging

Controlled by Supplier

Controlled by

Manufacturer

Production

Product-Life

Cycle Stages

Raw

Materials



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Assessment Stages(1) Inventory analysis

(2) Impact analysis

(3) Improvement analysis



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Inventory analysisspecifies the types and

quantities of materials

and energy inputs

needed and the

resulting environmental

releases in the form of

solid, liquid, and

gaseous residues.



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Inventory Analysis


continued


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Inventory Analysis



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Impact analysisassesses theenvironmental effects ofcompeting designs andprovides a relativeranking of those effects.



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Cost assessmentdetermines the financialconsequences of theenvironmental impactsidentified in the inventoryand improvement stepsof life-cycle assessment.



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Improvement analysishasthe objective of reducing theenvironmental impactsrevealed by the inventory

and impact steps.



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Five core objectives for the environmentalperspectives:

1) Minimize hazardous materials

2) Minimize raw or virgin materials

3) Minimize energy requirements4) Minimize the release of residues

5) Maximize opportunities to recycle

4Strategic-Based Environmental

Responsibility Accounting


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Objectives and Measures: Environmental Perspective



S i B d E i l


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Non-Value-Added Cost Trends: Environmental Costs

St t i B d E i t l


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Environmental Cost Trend Graph

St t i B d E i t l


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2004 2005 2006 2007

Pounds emitted

CFC Emissions

Bar Graph for Trend Analysis



0

20

40

60

80

100

St t i B d E i t l


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Hazardous Waste Management Pie Chart




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End of

Chapter 16

: chapter16ppts environ cost

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