2 - Obsolescence Cost Calculation
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Practice Questions
Test your understanding with targeted questions
What is the formula for calculating the downtime cost?
💡 Hint: Think about what percentage applies to the equipment costs.
If the downtime cost is 54,000 rupees for the first year, how much is the cost per hour?
💡 Hint: Total cost divided by hours gives hourly rate.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary formula for downtime cost?
💡 Hint: Consider the percentage and how it relates to overall cost.
True or False: Obsolescence cost decreases as equipment ages.
💡 Hint: Reflect on how competition affects older equipment.
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Challenge Problems
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If a machine's equipment cost is 750 rupees per hour, and its obsolescence factor for the third year is 0.10, calculate the annual obsolescence cost and explain how it would affect future operational budgets.
💡 Hint: Apply the same formula we discussed for obsolescence calculations.
Consider a case where an operating machine shows a 0.97 productivity factor leading to increased cumulative costs over three years. How would failing to adjust for this affect the overall expense involved in machinery replacement?
💡 Hint: Think about how productivity percentages can change operational efficiency.
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