3.2.2 - Operating Cost
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Practice Questions
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What are ownership costs?
💡 Hint: Think about what costs continue even when equipment is idle.
What does depreciation represent?
💡 Hint: Consider the impact of time and usage on the value.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What are operating costs associated with equipment?
💡 Hint: Focus on what happens when you turn on the machinery.
True or False: Ownership costs only occur when the equipment is in use.
💡 Hint: Think about the expenses that are constant over time.
2 more questions available
Challenge Problems
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A bulldozer has an initial cost of 150,000 with a tire cost of 10,000, a salvage value of 15,000, and a useful life of 10 years. Calculate the annual depreciation using both the straight line and the double declining balance method.
💡 Hint: For double declining, remember to minus the tire cost and apply the faster depreciation.
Discuss the implications of underestimating ownership costs in a project bid. How could it impact overall profitability?
💡 Hint: Consider the long-term results of skewed financial expectations.
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