2.4 - Cumulative Cost Per Hour Calculation for Obsolescence
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Practice Questions
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What is the downtime cost per hour for equipment costing 900 rupees at 3% downtime?
💡 Hint: Use the formula downtime cost = equipment cost x downtime percentage.
If the yearly operating hours are 2000, what are the total downtime costs for the first year?
💡 Hint: Multiply the downtime cost per hour by operating hours.
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Interactive Quizzes
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What is the formula to calculate downtime costs?
💡 Hint: Remember the basic definition of downtime costs.
The obsolescence cost increases as the equipment gets older.
💡 Hint: Reflect on the concept of aging and its impact on machinery.
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Challenge Problems
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Assuming your equipment costs 1000 rupees per hour, and downtime costs increase from 2% to 4% over three years, calculate cumulative costs over these years while considering productivity loss of 0.95 each year.
💡 Hint: Calculate each year's downtime cost carefully and then sum them.
Your equipment cost is 700 rupees per hour, and obsolescence factor is 0.1. Calculate the impact of retaining this equipment for five years considering annual deterioration (using the third-year obsolescence cost model).
💡 Hint: Summarizing the yearly total will help arrive at a decision point.
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