A chemical company estimates the compensation and clean-up costs that might arise if an accidental spill from its plant polluted a nearby river. Using the US Environmental Protection Agency classification of environmental costs, how would these costs be classified?

Correct answer: A) Contingent costs

Explanation

Contingent costs are costs that may be incurred at a future date depending on events, such as fines, compensation and remediation after an accident. Conventional costs are ordinary operating costs such as materials and energy, potentially hidden costs are buried in general overheads, and image and relationship costs relate to stakeholders' perceptions.