Freaky Furniture Ltd is looking at two alternatives for disposing of an annual production of 300 kilolitres of waste paint, both of which are acceptable to the Victorian Environment Agency.
1. Freaky can pay paint recyclers to remove the waste paint at a cost of $50 per kilolitre. The recycler would then process the waste into 5 kilograms of solid waste compound and dispose of this in landfill.
2. Rent a recycling machine which strips the residues and produces 10 kilograms of waster compound per kilolitre, which then needs to be disposed of in landfill. The annual rent of the machine is $15,000 and the operating cost is $0.30 per kilolitre
1. Which alternative is superior on financial grounds?
2. List five alternative and social factors that Freaky may need to consider before selecting and alternative.
3. Are there any implications of this decision for the broader economy? Explain your answer.