6. Operating Conditions

Try these first

1. 1.

   What is the difference between operating costs and ownership costs?

   Hint

   Consider how often costs are incurred.

2. 2.

   Name two components of operating costs.

   Hint

   Think about what is used during operation.

3. 3.

   What do operating costs depend on?

   • Frequency of use
   • Ownership duration
   • Purchase price

   Hint

   Focus on when costs are incurred.

4. 4.

   Is it true that ownership costs are fixed regardless of equipment use?

   • True
   • False

   Hint

   Think about how ownership impacts costs.

5. 5.

   Calculate the total operating cost for a piece of equipment given the following parameters: Fuel cost per hour is $50, labor cost is$30/hour, and maintenance costs are estimated at $20/hour. If the equipment runs for 8 hours a day, what is the daily operating cost?

   Hint

   Add together all the different cost components.

6. 6.

   A construction company owns two excavators: Excavator A running in average conditions incurs $200 daily operating costs, while Excavator B operates in harsh conditions costing$350. If Excavator A operates for 10 days and Excavator B for 10 days, what is the total operating cost?

   Hint

   Calculate individually for both excavators and then sum the totals.