1) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $9,000 and will have six-year useful life and a $3,000 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $5,000 per year. The cost of these prescriptions to the pharmacy will be about $2,000 per year. The pharmacy depreciates all assets using the straight-line method. What is the payback period for the auto? (Ignore income taxes in this problem)

1.2 years

1.8 years

2.0 years

3.0 years

2) In traditional costing systems, all manufacturing costs are assigned to products-even manufacturing costs that are not caused by the products: True or False?