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Ch.09 Kinney 9e SM Final.doc
Ch.09_Kinney_9e_SM_Final.doc
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Ch.09 Kinney 9e SM Final.doc-CHAPTER 9 BREAK-EVEN ...
Ch.09_Kinney_9e_SM_Final.doc-CHAPTER 9 BREAK-EVEN POINT AND COST-VOLUME-PROFIT
Ch.09 Kinney 9e SM Final.doc-CHAPTE...
Ch.09_Kinney_9e_SM_Final.doc-CHAPTER 9 BREAK-EVEN POINT AND COST-VOLUME-PROFIT
Page 14
274
Chapter 9
These rationalizations seem to indicate that unhealthy and unethical acts can
be permitted and tolerated if a large number of directly affected people benefit
without regard for the effects on people or entities that are indirectly affected.
While utilitarianism does look at the greatest good for the greatest number, it
considers all parties—directly and indirectly affected—in making that cost-
benefit analysis. The company in this case is not considering the indirect
effects of its actions.
d.
The president must take some action to deal with the problem. First, the
dumping should be discontinued altogether until the waste is tested to
determine if it is cancer causing. If it is not, obtain information on the
environmental effects of the dumping and, if not harmful, continue to dump.
The company should then report its findings to the authorities and discontinue
falsifying its reports.
If the waste is cancer causing or causes significant environmental damage, the
company should immediately issue a policy statement that no additional
dumping shall take place. Then the costs of treating the waste to neutralize it
should be compared to other alternatives that might exist or could be created
such as using it as a raw material in another product or introducing alternative
processing methods. The company could solicit the employees’ and
townspeople’s assistance since all have a large vested interest in finding a
solution to the problem. Investigation of how other companies producing the
same waste handle the problem would be helpful; some of this type of
information should be available from the EPA or state environmental
agencies. If other companies are handling the waste in a similar manner, all
companies could be liable for the costs of cleanup, which would disallow any
economic advantage to the other companies. In addition, the company should
investigate the costs of cleaning up the waste (if possible) that has already
been dumped. Since all of these options take time, however, the company will
most likely have to incur additional short-run costs so that the long-run effects
can be minimized.
33.
a.
Revenue is constant per unit within the relevant range.
b.
Variable costs are constant per unit within the relevant range. Labor
productivity will not change.
c.
The sales mix remains constant as volume changes within the relevant range.
d.
Mixed costs can be accurately separated into their fixed and variable
components.
e.
All variable costs are constant per unit within the relevant range and total
fixed cost is constant within the relevant range.
f.
Sales and production are equal.
g.
No capacity additions will be made within a period.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly
accessible website, in whole or in part.
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