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A painting company is deciding on 2 options, hire a painter that should be paid P70 for labor cost per painted unit or purchase a spraying machine that costs P750,000. If the company chooses to purchase the machine, it will reduce the labor cost to P10 per painted unit. The equipment is estimated to be valueless after 3 years of operation. Determine the minimum number of units that need to be painted annually to justify the cost of purchasing the new machine.

A painting company is deciding on 2 options, hire a painter that should be paid P70 for labor cost per painted unit or purchase a spraying machine that costs P750,000. If the company chooses to purchase the machine, it will reduce the labor cost to P10 per painted unit. The equipment is estimated to be valueless after 3 years of operation. Determine the minimum number of units that need to be painted annually to justify the cost of purchasing the new machine.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A painting company is deciding on 2 options, hire a painter that should be paid P70 for labor cost per painted unit or purchase a spraying machine that costs P750,000. If the company chooses to purchase the machine, it will reduce the labor cost to P10 per painted unit. The equipment is estimated to be valueless after 3 years of operation. Determine the minimum number of units that need to be painted annually to justify the cost of purchasing the new machine.
Transcribed Image Text:A painting company is deciding on 2 options, hire a painter that should be paid P70 for labor cost per painted unit or purchase a spraying machine that costs P750,000. If the company chooses to purchase the machine, it will reduce the labor cost to P10 per painted unit. The equipment is estimated to be valueless after 3 years of operation. Determine the minimum number of units that need to be painted annually to justify the cost of purchasing the new machine.
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