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Is it correct to say, that environmental related costs are those that can be calculated with ABC and then attributed to the products, such as incineration or sewage plant costs or spill costs, and environmental driven are those that arise as a result of production, such as energy costs, that are hidden in general overheads. Waste disposal costs are environmental driven cost? What about such costs as preparedness costs or control of waste cost?
Thanks.
No. ABC doesn’t calculate the costs – we calculate the costs and use ABC to attribute them to the products.
ABC is certainly one way we might try and deal with them, but not all are easily measurable and not all have obvious cost drivers.The ways of attempting to deal with environmental costs that you should be aware of for the exam are those detailed in the relevant chapter of our free lecture notes.
(Incidentally, the examiner said some time ago that any question dealing with environmental costing would never be more than about 8 marks, and would not involve calculations.)
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