Carbon Emissions Cost Analysis with Activity-Based Costing

Wen-Hsien Tsai and Shi-Yin Jhong
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Wen-Hsien Tsai: Department of Business Administration, National Central University, Jhongli, Taoyuan 32001, Taiwan
Shi-Yin Jhong: Department of Business Administration, National Central University, Jhongli, Taoyuan 32001, Taiwan

Sustainability, 2018, vol. 10, issue 8, 1-26

Abstract: Due to growing awareness about environmental issues, consumers are becoming more likely to purchase environmentally friendly products that involve lower carbon emissions (CE). Environmental regulations are being enforced and lower-carbon products are being produced in order to maintain competitiveness when complying with such regulations. This paper aims to explore the effect of CE on profit through three kinds of models using the activity-based costing (ABC) approach. The results indicate that governmental policy makers can effectively decrease CE by Total Quantity Control (TQC) to resolve problems of environmental degradation. Governmental policy makers can control CE by limiting the quantities of CE, thereby forcing manufacturers to decrease CE during production. Furthermore, policy makers can set up regulations on CE quotas to control CE well instead of imposing carbon taxes. Therefore, manufacturers will try their best to find methods of improving production processes, equipment, and/or materials to decrease the CE quantity and achieve maximum profit under the restricted carbon emissions quotas.

Keywords: carbon emissions; cap & trade; green production; footwear industry; activity-based costing (ABC) (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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