How would the non-inclusion of environmental costs impact Laurie Manufacturing in the future

Allocation of marks Please refer to the marking rubric provided for this assessment task. Please ensure that you use the correct referencing style (APA style) as stated in the Unit Profile. Formatting You are required to consider the case study provided and write an executive report using Power Point. Your report should be set out in an appropriate format under the following headings: 1. Executive summary – one page – an overview of the important issues and their background, and providing a summary of your findings. 2. Analysis – details of the analysis undertaken and the results. All calculations should be shown. 2 3. Findings – detail and justify your findings from the analysis. Take care to recognise and describe any limitations. 4. Action items/limitations – detail the limitations from the analysis. Identify potential areas for actions to be undertaken by the organisation. 5. The report must not exceed 8 Power Point Slides using the Times New Roman Font, font sizes between 16-18 Submission requirements You must submit your assignment in Power Point format electronically through the secure upload facility in the Moodle system. Please do not email your assignment to your lecturer or the Unit Coordinator. Please ensure all details are complete in the Cover sheet and ensure that it is the FIRST page of your assignment. These are the minimum requirements as outlined in the marking criteria available on the moodle site. However, students should note that satisfactorily meeting the minimum requirements will typically only result in the minimum pass grade being awarded. Higher grades will be awarded for students that exceed these minimum requirements. See the marking criteria for further details. Assignment questions Laurie Manufacturing Pty Ltd., manufactures grass collection attachments for Lawn Mowers that are sold in the market. The income statement for 2018 indicated an operating loss of $420,000 details of which are given below: Laurie Manufacturing Pty Ltd. Sales (30,000 attachments @$500 each) 15,000,000 Fixed Costs 5,670,000 Variable Costs 9,750,000 Operating income (420,000) Mr Samuel (cost accountant) and Mr Martin, his assistant, have been asked by the owners of Laurie Manufacturing to see if there are ways to reduce costs. After some thinking and some analysis, Martin proposes to Samuel the following two options: 1. Option 1 - To reduce the variable costs by 70%, by procuring cheaper direct raw materials. 2. Option 2 - To reduce the company’s variable costs by 60%, by reducing the costs it currently incurs for safe disposal of wasted plastic resulting from the manufacture of the grass collection attachments. Samuel is concerned that this would expose Laurie Manufacturing to potential 3 environmental liabilities. He requests Martin to factor into his analysis an estimation of potential environmental liabilities. Samuel responds by saying: “We are not violating any laws. There is some possibility that we may have to incur environmental costs in the future, but if we bring it up now, this proposal will not go through because the owners will always assume that these costs could be larger than they turn out to be. We may be in danger of the company closing down and costing our jobs. The only reason our competitors are making money is because they are doing exactly what I am proposing.” REQUIRED: 1. Show calculations for break even revenues for 2018. 2. Show calculations to determine the break even revenues for 2018, if variable costs are at 70% and 60% of revenues as per options 1 and 2. 3. Show calculations to determine the operating income for 2018, if variable costs were at 70% and 60% of revenues as per options 1 and 2. 4. Evaluate Martin’s comments in line with the ethical standards as advanced by the Institute of Management Accountants. 5. How would the non-inclusion of environmental costs impact Laurie Manufacturing in the future.