The Hidden Costs - Big Mac, Facebook, Starbucks

A GREAT YEAR 2013, LOOKING FORWARD TO ANOTHER - 2014

Exciting times await in 2014. Kasturi School of Accountancy has witnessed record number of ACCA graduates in 2013. 

CONGRATULATIONS!  

We are always proud and privileged to share in your success. Thank you for working so mind boggling industriousness, steely determination, military-like discipline and eagle-like focus on Graduation goal. 

You certainly deserve the BEST that the future can offer. 

Relevant : P1, P7 and Socially Responsible Students

Examiner David Campbell's Article (extracts) on Social and Environment Costing 

"While accounting instruments already existed for reporting financial performance, there weren’t any for accounting for non-costable impacts, and it was this that gave rise to modern social and environmental accounting.

If, for example, a meat processor buys in beef and processes it for onward sale (eg as burgers), then the cost of the beef includes all of the identifiable costs incurred by the supply chain up to that point (plus profit margins, of course). So for beef, those costs will include elements of farming, land costs, logistical costs, abattoir costs, and so on. 

However, the farmer who produced the beef may have reared the cattle on land bought as a result of forest clearance. He may have paid a market price for the land upon which to graze his cattle, but the initial deforestation has implications that could not have been factored into the price he paid for the land. How, for example, could you attribute a cost to the loss of species habitat or the loss of greenhouse gas processing capacity? It is because of the difficulties in allocating the costs of these externalities that, environmental activists say, the price of that beef does not reflect the true – or full – cost, which should include the cost to the environment."

Exam Style questions: 

1) What is the Gray, Owen and Adams approach that is both acceptable to shareholders and society? Justify your answers in Starbucks context. [10]

2) Explain if firm should have an Environmental Audit. [8]

Enjoy the Videos on Hidden Costs or Externalities costs on iconic companies  by www.insurancequotes.org 

 

Best wishes on your coming results February 2014! Remember, complete the journey and not be discouraged by a few speed humps that slow down the graduation process. 

PS: I have updated the post links to ACCA's Technical articles as the accaglobal website has changed. 

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