Niobrara Pesticide Company's new president has learned that, forthe past four years, the company has been dumping its industrialwaste into the local river and falsifying reports to authoritiesabout the levels of suspected carcinogens in that waste. The plantmanager says that there is no proof that the waste causes cancerand that only a few fishing villages are within 100 milesdownriver. If the company must treat the substance to neutralizeits potentially injurious effects and then transport it to a legaldisposal site, the company's variablr and fixed costs would rise toa level that might make the firm uncompetitive. If the companyloses its competitive advantage, 10,000 local employees couldbecome unemployed and the town's economy could collapse.
A. What specific variable and fixed costs can you identify thatwould increase (or decrease) if the waste were treated rather thandumped? How would these costs affect product contributionmargin?
B. What ethical conflicts does the president face?
C. What rationalizations can you detect that plant employeeshave devised?
D. What options and suggestions can you offer the president?
Niobrara Pesticide Company's new president has learned that, forthe past four years, the company has been dumping its industrialwaste into the local river and falsifying reports to authoritiesabout the levels of suspected carcinogens in that waste. The plantmanager says that there is no proof that the waste causes cancerand that only a few fishing villages are within 100 milesdownriver. If the company must treat the substance to neutralizeits potentially injurious effects and then transport it to a legaldisposal site, the company's variablr and fixed costs would rise toa level that might make the firm uncompetitive. If the companyloses its competitive advantage, 10,000 local employees couldbecome unemployed and the town's economy could collapse.
A. What specific variable and fixed costs can you identify thatwould increase (or decrease) if the waste were treated rather thandumped? How would these costs affect product contributionmargin?
B. What ethical conflicts does the president face?
C. What rationalizations can you detect that plant employeeshave devised?
D. What options and suggestions can you offer the president?
