Page 51 - P1 Integrated Workbook STUDENT 2018
P. 51
Other elements of cost accounting systems
Environmental costing
3.1 Why use environmental costing
Firms are under increasing pressure to reduce their environmental impact. To help
towards this it is vital to understand the full range of environmental costs.
Management are often unaware of the extent of environmental costs and cannot
identify opportunities for cost savings.
3.2 Environmental costing and ABC
Environmental costs should be removed from general overheads.
They will have their own cost pool and cost drivers.
They should be charged to products in a similar way to all other activity based
costs.
This should ensure that product costs fully reflect the true cost of production.
47
