50.1K

Verified Solution

Link Copied!

Fleetfoot Ltd. is a large Australian company that manufactures sports shoes. Two years ago, the CEO announced the company's commitment to achieving net zero emissions by 2050, and the company has since implemented a number of green initiatives. A newly hired accounts clerk prepared the following environmental cost report for the year just ended: Fleetfoot Ltd. Environmental Cost Report for the year ended 30 June 2021 S'000 $'000 % per category Prevention Installing solar panels 9,000 Developing a system for ranking current suppliers 50 based on their sustainability performance 9,050 53.4% Detection Testing for toxic waste 500 Repair and maintenance of machine used to 100 manufacture components of shoes 600 3.5% Internal Failure Operating pollution control equipment 300 300 1.8% External Failure Cleaning up chemically contaminated soil 2,000 Using recycled raw materials 5,000 7,000 41.3% 16,950 100.0% Required: (a) Fleetfoot's CFO has asked you to review the report as she believes that the accounts clerk has classified some costs incorrectly. Identify three (3) errors. For each error identified, you need to (i) identify the correct category of environmental costs, and (ii) explain the error and justify why your new classification is correct. (9 marks) (b) The accounts clerk is very pleased with Fleetfoot's environmental performance as the non-conformance to conformance ratio is less than 1, and total environmental cost is 10% of total operating costs of $169.5 million. Ignoring any classification mistakes made and your answer in part (a), do you agree with the accounts clerk? Explain your answer drawing on case information and your knowledge of environmental external failure costs. (2 marks)

Answer & Explanation Solved by verified expert

See Answer