Exercise 9-2 Problem Solving

Gusion Inc. is in the business of manufacturing kitchen knives. You are provided with the following
information:

Description Amount
Equipment purchased to reduce emissions ₱200, 000
Monitoring emissions 50, 000
Estimated fines for breaching environmental regulations 500, 000
Estimated future costs – the need to dispose of firm’s products
550, 000
which contain hazardous material
Purchase of recyclable material 130, 000
On-going clean-up costs 300, 000
Estimate of potential liability – oil spill 600 000
Purchase of recyclable packaging materials 25, 000
Estimate of lost business – adverse television publicity 110, 000

Calculate the following:

a) Conventional Environmental Costs
b) Hidden Environmental Costs
c) Contingent Environmental Costs
d) Relationship and Image Environmental Costs
e) Societal Environmental Costs

Exercise 9-3 Problem Solving

Walder Frey Inc. is a manufacturing company in the business of making cooking oils. You are provided
with the following information:

Description Amount
Auditing environmental risks ₱25, 000
Auditing supplier performance 50, 000
Employee medical costs following a chemical spillage 5, 000
Fines for environmental damage 20, 000
Cost of cleaning up plant following a leakage 30, 000
Cost to reduce pollutants during manufacture 100, 000
Cost of employee training 50, 000
Depreciation of testing equipment 20, 000
Cost of supplies used in testing and monitoring 10, 000
Estimated lost sales revenue 500, 000
Cost of occupational health and safety claims 10, 000
Cost of cleaning up polluted sites 100, 000

Calculate the following:

a) Environmental Prevention Costs
b) Environmental Appraisal Costs
c) Environmental Internal Failure Costs
d) Environmental External Failure Costs