2. Caterpillar Method

Try these first

1. 1.

   What does the Caterpillar Method primarily estimate?

   Hint

   Think about what types of costs are involved.

2. 2.

   What is the basic formula for calculating depreciation?

   Hint

   Focus on the components of the formula.

3. 3.

   What is the main focus of the Caterpillar Method?

   • Estimating material costs
   • Estimating equipment costs
   • Estimating labor costs

   Hint

   Consider which costs are directly associated with equipment.

4. 4.

   True or False: Ownership costs include fuel expenses.

   • True
   • False

   Hint

   Think about what you pay when you own versus operate equipment.

5. 5.

   Calculate the total operating cost for a piece of equipment that has a fuel cost of $100, tire cost of$50, and repair costs of $25. How would combine these costs?

   Hint

   Add all components of the operating cost together.

6. 6.

   A construction company plans to use a bulldozer for a project that will last 500 hours. If the hourly ownership cost is $20 and the hourly operating cost is$30, calculate the total cost for the project duration.

   Hint

   First, find the combined hourly cost before multiplying by hours.