2.2.2 - FOG Cost
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Practice Questions
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What does FOG stand for in the context of equipment costs?
💡 Hint: Think of what consumables are used in machinery operation.
What is the formula for calculating depreciation?
💡 Hint: Recall the components needed for depreciation calculation.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the significance of FOG costs in equipment operation?
💡 Hint: Consider the maintenance needs of machinery.
The Peurifoy method uses which of the following for cost estimation?
💡 Hint: Think about how cash flows work over time in budgeting.
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Challenge Problems
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Calculate the total operating cost for a piece of machinery with an initial price of $100,000, a salvage value of $10,000, a depreciation period of 5,000 hours, and operating 50 hours with fuel consumption of 5 gallons per hour at $3 per gallon. FOG represents 15% of fuel cost.
💡 Hint: Break it down into depreciation, fuel cost, and then adding FOG.
Given an initial cost of $120,000, estimated annual maintenance (not including tires) as 12% of the delivered price, and an expected tire cost of $9,000. Calculate the operating cost considering an annual usage of 2,000 hours.
💡 Hint: First calculate the maintenance cost adjusted for tire costs, then divide by yearly usage to find hourly costs.
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