4. Upcoming Topics

Try these first

1. 1.

   Calculate the yearly downtime cost for a machine costing 900 rupees/hour with a downtime cost of 27 rupees/hour.

   Hint

   Multiply the downtime cost per hour by total operational hours in a year.

2. 2.

   What is the obsolescence cost if the machine retains 5% depreciation value?

   Hint

   Calculate 5% of the equipment cost.

3. 3.

   What is the downtime cost per hour if the equipment costs 900 rupees?

   • 27 rupees
   • 30 rupees
   • 54 rupees

   Hint

   Calculate 3% of 900 rupees.

4. 4.

   True or False: The obsolescence cost increases the longer a machine is retained.

   • True
   • False

   Hint

   Consider the concept of wear and tear.

5. 5.

   A company has two machines: Machine A costs 45,000 over 3 years of operation, while Machine B only costs 30,000 but fails within the same period. Analyze which machine should be prioritized for long-term operational efficiency.

   Hint

   Break down machine A costs by yearly expenses to understand its long-term viability.

6. 6.

   Evaluate if replacing a machine that incurs yearly obsolescence of 1,000 rupees post its economic life is financially sound compared with budget reallocation towards acquiring new machinery.

   Hint

   Calculate future costs considering both future obsolescence and investment returns.