ACCA Applied Skills · Performance Management · Accounting for environmental and sustainability factors
Which of the following is an example of an environmental appraisal cost?
Regular testing of effluent to check compliance is an appraisal cost because it involves monitoring and measuring activity against standards. Product redesign is prevention, waste disposal is internal failure, and lost sales from reputation damage are external failure costs.
- ARedesigning a product to use recyclable materials
- BDisposal of hazardous waste produced in processing
- CRegular testing of effluent to check compliance with regulationsCorrect
- DLost sales caused by damage to the company's green reputation
Explanation
Appraisal costs are incurred in monitoring and measuring activities to check compliance, such as testing effluent. Redesign is prevention, hazardous waste disposal is internal failure, and lost sales from reputation damage is an external failure (hidden) cost.
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