Niobrara Pesticide Company's new president has learned
that, for the past four years, the company has been dumping its industrial waste into
the local river and falsifying reports to authorities about the levels of suspected carcinogens
in that waste. The e plant manager says that there is no proof that the waste
Causes cancer and that only a few fishing villages are within 100 miles downriver. If
the company must treat the substance to neutralize its potentially injurious effects
and then transport it to a legal dump site, the company's variable and fixed costs
would rise to a level that might make the firm uncompetitive. If the company loses
its competitive advantage, 10,000 local employees could become unemployed and the
town's economy could collapse.
a. What specific variable and fixed costs can you identify that would increase (or
decrease) if the waste were treated rather than dumped? How would these costs
affect product contribution margin?
b. What ethical conflicts does the president face?
c. What rationalizations can you detect that plant employees have devised?
d. What options and suggestions can you off er the president?

Niobrara Pesticide Company's new president has learned
that, for the past four years, the company has been dumping its industrial waste into
the local river and falsifying reports to authorities about the levels of suspected carcinogens
in that waste. The e plant manager says that there is no proof that the waste
Causes cancer and that only a few fishing villages are within 100 miles downriver. If
the company must treat the substance to neutralize its potentially injurious effects
and then transport it to a legal dump site, the company's variable and fixed costs
would rise to a level that might make the firm uncompetitive. If the company loses
its competitive advantage, 10,000 local employees could become unemployed and the
town's economy could collapse.
a. What specific variable and fixed costs can you identify that would increase (or
decrease) if the waste were treated rather than dumped? How would these costs
affect product contribution margin?
b. What ethical conflicts does the president face?
c. What rationalizations can you detect that plant employees have devised?
d. What options and suggestions can you off er the president?

What is the answer to this problem

Quote:

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Originally Posted by gmg714

Niobrara Pesticide Company's new president has learned
that, for the past four years, the company has been dumping its industrial waste into
the local river and falsifying reports to authorities about the levels of suspected carcinogens
in that waste. The e plant manager says that there is no proof that the waste
Causes cancer and that only a few fishing villages are within 100 miles downriver. If
the company must treat the substance to neutralize its potentially injurious effects
and then transport it to a legal dump site, the company's variable and fixed costs
would rise to a level that might make the firm uncompetitive. If the company loses
its competitive advantage, 10,000 local employees could become unemployed and the
town's economy could collapse.
a. What specific variable and fixed costs can you identify that would increase (or
decrease) if the waste were treated rather than dumped? How would these costs
affect product contribution margin?
b. What ethical conflicts does the president face?
c. What rationalizations can you detect that plant employees have devised?
d. What options and suggestions can you off er the president?

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