1.4 - Average Annual Cumulative Cost Calculation
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Practice Questions
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What is the depreciation amount for a machinery with an initial book value of 30,00,000 rupees at a rate of 40%?
💡 Hint: Use the formula Depreciation = Book Value * Rate.
If the annual operating cost is 10,00,000 and the depreciation is 5,00,000, what is the total annual cost?
💡 Hint: Total Annual Cost = Operating Cost + Depreciation.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What formula is used to calculate depreciation?
💡 Hint: Think about how you calculate the reduced value of an asset over time.
True or False: Economic life refers to the maximum age an asset can sustain in operations economically.
💡 Hint: Recall the purpose of analyzing costs over time.
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Challenge Problems
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If a machine has an initial cost of 15,00,000 rupees, and depreciation is applied annually at a rate of 30%, what will be its value after three years?
💡 Hint: Keep track of the book value after each year's depreciation.
Given a machine has a cumulative cost of 1,20,000 after four years and an operating cost that increases by 5,000 each year starting at 10,000, what is the average annual cost?
💡 Hint: Break down the annual costs clearly over the years.
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