At the Beginning of the Year, Molybdenum Company Initiated an Environmental

question 161

Multiple Choice

At the beginning of the year, Molybdenum Company initiated an environmental cost reduction program. To help assess the impact of the environmental cost reduction improvement program, the following data was collected for the current and preceding year: $\begin{array}{lrr}&\text { Freceding Year }&\text { Current Year }\\\text { Operating costs } & \$ 2,400,000 & \$ 2,400,000 \\\text { Training employees } & 30,000 & 48,000 \\\text { Inspecting processes } & 7,000 & 8,000 \\\text { Operating pollution control equipment } & 32,000 & 50,000 \\\text { Maintaining pollution equipment } & 60,000 & 28,000 \\\text { Devel oping environmental performance measures } & 10,000 & 12,000 \\\text { Cleaning up lake } & 36,000 & 24,000\end{array}$ For the current year, internal failure costs are what percentage of operating costs?

• A)4.25%
• B)3.25%
• C)2.00%
• D)1.25%

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Definitions:

Income

The reward garnered over time, generally in a consistent pattern, from occupational or investment sources.

Expected Utility Function

A concept in economics that predicts the utility or satisfaction a rational individual expects to receive from different outcomes, used in decision making under uncertainty.

Sure Payment

A guaranteed payment, often referring to financial transactions where the payer is obligated to pay a certain amount.

Lottery

A form of gambling which involves drawing lots for a prize, often administered by state or federal governments.