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Mark decided to purchase a new automobile. Being concerned about environmental issues, he is leaning toward the hybrid rather than the gasoline only model. Nevertheless, as a new business school graduate, he wants to determine if there is an economic justification for purchasing the hybrid, which costs $1,000 more than the regular model. He has determined that city/highway combined gas mileage of the hybrid and regular models are 30 and 24 miles per gallon respectively. Mark anticipates he will travel an average of 10,000 miles per year for the next several years.
Question 1: The payback period of the incremental investment if gasoline costs $3 per gallon is:
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This individual assignment is based on the TerraCycle Inc.
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A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.
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