3.1 - Significance of Estimation of Cost of Equipment
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Practice Questions
Test your understanding with targeted questions
What are the two main components of equipment costs?
💡 Hint: Think about costs incurred with and without usage.
What does depreciation refer to?
💡 Hint: Consider how equipment changes from purchase to sale.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What is the main purpose of equipment cost estimation?
💡 Hint: Consider what can happen if costs are underestimated.
True or False: Operating costs only occur when the equipment is idle.
💡 Hint: Think about when you incur costs for operating machinery.
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Challenge Problems
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A construction equipment has an initial cost of $100,000, expected to be used for 10 years. The salvage value is estimated at $10,000. Calculate the annual depreciation using the straight-line method.
💡 Hint: Use the formula for straight-line depreciation.
If a project's total ownership cost is $50,000 and it must cover both ownership and operating costs which are 60% ownership and 40% operating, how much can be allocated to operating costs?
💡 Hint: Calculate percentage of total costs for allocation.
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