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

question 128

Multiple Choice

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

• A)0.8350%
• B)1.0000%
• C)1.1875%
• D)1.5350%

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Definitions:

Foreign Competition

Competition that domestic companies face from abroad, from foreign companies offering the same or similar products or services.

Health Care Provider

An individual or institution that provides medical services, including doctors, nurses, hospitals, and clinics.

Market Price

The current price at which an asset or service can be bought or sold in an open market.

Government Intervention

Actions taken by a government to influence or regulate economic activity, often to correct market failures and achieve desired social or economic outcomes.