A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs currently used cost $45.90 per bulb and last 14,600 hours before burning out. The new bulb ($60 per bulb) provides the same amount of light and consumes the same amount of energy but lasts twice as long. The labor cost to change a bulb is $16.00. The lights are on 19 hours a day, 365 days a year. If the firm's MARR is 15%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? (Assume that the firm's marginal tax rate is 40%.)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs currently used cost $45.90 per bulb and last 14,600 hours before burning out. The new bulb ($60 per bulb) provides the same amount of light and consumes the same amount of energy but lasts twice as long. The labor cost to change a bulb is $16.00. The lights are on 19 hours a day, 365 days a year. If the firm's MARR is 15%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? (Assume that the firm's marginal tax rate is 40%.)
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