Unit: Advanced Management Accounting
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| 1. | The processing division reported operating profit of Sh.140,000,000 before recognising the environmental costs shown below. The listed environmental costs are incremental and have not been included in the reported profit. | ||||||||||||||||
| 2. | Capital employed in the processing division is Sh.620,000,000. | ||||||||||||||||
| 3. | The company’s weighted average cost of capital is 12%. | ||||||||||||||||
| 4. | For economic value-added purposes, ignore taxation. | ||||||||||||||||
| 5. | Environmental cost pools and drivers are as follows:
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| 6. | Activity-driver usage by product line is as follows:
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| 2022 Sh.“000” | 2023 Sh.“000” | |
| Sales revenue | 13,000,000 | 20,000,000 |
| Evaluating and selecting suppliers | 154,000 | 600,000 |
| Treating and disposing of toxic materials | 500,000 | 800,000 |
| Inspecting process for regulatory conformance | 450,000 | 300,000 |
| Restoration cost of carbon emissions | 1,350,000 | 1,200,000 |
| Recycling scrap cost | 550,000 | 300,000 |
| Testing for contaminants | 88,000 | 100,000 |