5.3. Hourly Repair Cost Calculation

Try these first

1. 1.

   What are consumables in the context of operating costs?

   Hint

   Think about what the machine needs to operate efficiently.

2. 2.

   What is the difference between ownership and operating costs?

   Hint

   Consider which costs are incurred whether the equipment is used or not.

3. 3.

   What is an operating cost?

   • Costs incurred when the equipment is idle
   • Costs incurred when the equipment is used
   • Costs regarding ownership

   Hint

   Consider when the machine is active.

4. 4.

   True or False: Ownership costs are variable.

   • True
   • False

   Hint

   Reflect on the nature of machine ownership.

5. 5.

   A bulldozer has an initial cost of $150,000, a tire cost of$20,000, and is expected to have a lifetime repair cost of 85% of the initial. Calculate the hourly repair cost over 3,000 operating hours.

   Hint

   Calculate the Lifetime Repair Cost, get the Year Digits for the final hours of operation.

6. 6.

   Discuss how changing job conditions from favorable to unfavorable might impact repair costs for heavy machinery.

   Hint

   Think of real-time examples from your prior experience.