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Environmental cost

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Environmental cost

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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  • October 20, 2021 at 11:31 am #638585
    Imran.Sajjad
    Participant
    • Topics: 26
    • Replies: 8
    • ☆

    Environmental Management Accounting is used to reduce the disposal of waste causing damage to the environment which the business should allocate environment costs to restore the waste.

    Environmental cost is basically a wastage cost that results from the waste in making a particular product(s).

    Methods of Accounting for Environmental costs:

    1) Inflow / Outflow analysis
    This approach measures how many resources were input into production with the resources that is output which is compared together to see how many resources went to waste.

    2) Flow cost accounting
    It measures resources input into the production to see the waste done by each three organizational structure which are divided into three categories:

    – Material : resources such as raw material used in the production
    – System : resources such as quality control used in the production
    – Delivery & Disposal: resources such as delivery to the customers and disposing of any waste used in the production

    3) Lifecycle costing
    Environment costs such as disposal of waste is included in the Lifecycle costing calculations to account for them because the waste is done by the product we are producing so we should include that environmental cost to that product.

    4) Environmental ABC
    Environmental costs which are related to environment-related is included in the ABC calculations to account for them because the waste is done by the product we are producing so we should include that environmental cost to that product.

    Is everything correct? I asked because I don’t find your lecture on this topic.

    October 20, 2021 at 3:39 pm #638606
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    It all seems correct.

    There is no lecture for the reasons stated in the list of lectures, but it is all covered in full in our free lecture notes.

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