Practice Minimum Cost Method Overview - 5.2 | 18. Depreciation Calculation | Construction Engineering & Management - Vol 1
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Knowledge

5.2 - Minimum Cost Method Overview

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is depreciation?

💡 Hint: Think about how an asset's value decreases over time.

Question 2

Easy

How do you calculate the book value after one year?

💡 Hint: Use the initial value and subtract the determined depreciation.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the primary purpose of the minimum cost method?

  • To calculate depreciation only
  • To determine replacement timing based on cost
  • To evaluate total revenue

💡 Hint: Think about the method's goal.

Question 2

True or False: Dr. James Douglas's guidelines suggest that machinery should be replaced when the estimated annual cost of the current machine is lower than the proposed machine's costs.

  • True
  • False

💡 Hint: Consider when replacement should happen.

Solve and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A machine has an initial cost of 5 million rupees, with 30% depreciation yearly. Calculate the depreciation and book value after two years, then find the cumulative cost if operating costs are 1.5 million each year.

💡 Hint: Follow the depreciation and cost formulas step by step.

Question 2

If a proposed replacement's average annual cumulative cost is 2 million rupees, and your current machine's estimated annual cost is 2.5 million, describe the decision to replace.

💡 Hint: Compare current and proposed costs.

Challenge and get performance evaluation