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CHAPTER 16 ENVIRONMENTAL COSTS: MEASUREMENT AND CONTROL QUESTIONS FOR WRITING AND DISCUSSION 1. Ecoefficiency is the belief that organizations can produce more goods and services while simultaneously reducing negative environ- mental consequences, resource consump- tion, and costs. 2. The four objectives are to (1) reduce envir- onmental impact, (2) reduce environmental liability, (3) reduce consumption of re- sources, and (4) increase product value. 3. The four opportunities for improving ecoeffi- ciency are (1) process improvement and in- novation, (2) revalorization of products, (3) redesign of products, and (4) new ways of meeting customer needs. 4. An environmental cost is a cost incurred be- cause poor environmental quality exists or may exist. 5. The four categories of environmental costs are prevention, detection, internal failure, and external failure. Prevention costs are costs incurred to prevent degradation to the environment. Detection costs are incurred to determine if the firm is complying with envir- onmental standards. Internal failure costs are costs incurred to prevent emission of contaminants to the environment after they have been produced. External failure costs are costs incurred after contaminants have been emitted to the environment. 6. Realized external failure costs are environ- mental costs paid for by the firm. Unrealized or societal costs are costs caused by the firm but paid for by third parties (e.g., mem- bers of society bear these costs). 7. Full environmental costing means that all environmental costs are assigned to the product, including societal costs. Full private costing means that only private costs are assigned to products. 8. An activity-based environmental cost per unit of product signals two things. First, it in- dicates how much opportunity exists for improving environmental and economic performance. Second, it is a measure of the relative cleanliness of products. The “dirty” products should receive greater attention than the ones that are “clean.” 9. Life-cycle assessment is an approach that identifies the environmental consequences of a product through its entire life cycle and then searches for opportunities to obtain en- vironmental improvements. 10. Life-cycle costing improves life-cycle analys- is by assigning economic consequences to the environmental impacts identified in the inventory and impact steps. Assessing the financial consequences allows competing designs to be compared on a common measure, allowing an environmental ranking of competing designs. 11. The justification for adding an environmental perspective is based on the concept of eco- efficiency. If ecoefficiency is a valid concept, then adding an environmental perspective is legitimate because improving environmental performance can be the source of a compet- itive advantage. 12.
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This note was uploaded on 01/31/2009 for the course ACCOUNTING ACCT 470 taught by Professor Professorrajkiani during the Spring '08 term at California State University , Monterey Bay.

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