As Part of Its Environmental Cost Reporting System, Crimson Company

question 167

Multiple Choice

As part of its environmental cost reporting system, Crimson Company tracks its total environmental costs. Consider the cost and sales data given: $$\begin{array}{l}\begin{array} { c c c } &\text { Total }\\\text { Year }&\text { Environmental Costs } & \text { Sales Revenue } & \text { Operating Costs } \\2018&\$ 1,750,000 & \$ 11,250,000 & \$ 5,000,000 \\2019&\$ 1,125,000 & \$ 13,725,000 & \$ 7,000,000\end{array}\end{array}$$ What is the change in environmental costs from 2018 to 2019 as a percentage of operating costs of 2018? (Round to two decimal places.)

• A)12.50%
• B)10.00%
• C)12.22%
• D)17.78%

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Definitions:

Top-Down Managerial Approach

This approach in management involves decision-making and directive processes originating from the upper echelons of the organization hierarchy and flowing downward.

Budget Preparation

The process of estimating future financial performance and resource requirements, forming the basis of a financial plan.

Sales Budget

An estimate of the expected total sales revenue and the necessary selling expenses for a specific period, often broken down by product line or category.

Production Budget

An estimation of the costs associated with the production process, including raw materials, labor, and overhead expenses, for a specific period.