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B. Following is the cost break-down structure (CBS) for the development of a new grocery self-checkout system in a grocery chain. The Program Start Date is Jan 1, 2020 (to be used as present date for present value calculations). The expenditure date is given alongside each cost category.: a) Research and Development Cost: $200,000 (Dec. 31, 2020)

B. Following is the cost break-down structure (CBS) for the development of a new grocery self-checkout system in a grocery chain. The Program Start Date is Jan 1, 2020 (to be used as present date for present value calculations). The expenditure date is given alongside each cost category.: a) Research and Development Cost: $200,000 (Dec. 31, 2020)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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B. Following is the cost break-down structure (CBS) for the development of a new grocery self-checkout system in a grocery chain. The Program Start Date is Jan 1, 2020 (to be used as present date for present value calculations). The expenditure date is given alongside each cost category.: a) Research and Development Cost: $200,000 (Dec. 31, 2020) b) Construction Cost: i. Procure Grocery Self-Checkout Systems (100 units @ $5,000 per unit) (Dec. 31, 2020) ii. Installation Costs $25,000 (Dec. 31, 2020) c) Operating Cost: i. Labor Cost: $1,000,000 per year for 5 years, the first one occurring on 12/31/2021 at the end of the first year of operation. ii. Energy Cost: $200,000 (same time schedule as Labor Cost) d) Maintenance Cost: $100,000 (same time schedule as Labor Cost) e) Retirement and Disposal Cost: $500 per unit at the end of the fifth year of operation, on 12/31/2025
Transcribed Image Text:B. Following is the cost break-down structure (CBS) for the development of a new grocery self-checkout system in a grocery chain. The Program Start Date is Jan 1, 2020 (to be used as present date for present value calculations). The expenditure date is given alongside each cost category.: a) Research and Development Cost: $200,000 (Dec. 31, 2020) b) Construction Cost: i. Procure Grocery Self-Checkout Systems (100 units @ $5,000 per unit) (Dec. 31, 2020) ii. Installation Costs $25,000 (Dec. 31, 2020) c) Operating Cost: i. Labor Cost: $1,000,000 per year for 5 years, the first one occurring on 12/31/2021 at the end of the first year of operation. ii. Energy Cost: $200,000 (same time schedule as Labor Cost) d) Maintenance Cost: $100,000 (same time schedule as Labor Cost) e) Retirement and Disposal Cost: $500 per unit at the end of the fifth year of operation, on 12/31/2025
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