3.2.2 - FOG Cost Calculation
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Practice Questions
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What does FOG stand for?
💡 Hint: Think about consumables for machinery.
How do you calculate hourly depreciation?
💡 Hint: Recall the formula shared in class.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does FOG stand for?
💡 Hint: Consider the essential maintenance items.
True or False: The Peurifoy method ignores the time value of money.
💡 Hint: Think about the importance of cash flow timings.
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Challenge Problems
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A construction company is deciding between two excavators. Excavator A has an initial cost of $250,000, a salvage value of $25,000, and an expected life of 15,000 hours. Excavator B has an initial cost of $300,000, a salvage value of $30,000, and 10,000 hours of expected life. Calculate the hourly depreciation for both and determine which is more cost-effective in terms of depreciation.
💡 Hint: Use the depreciation formula you learned to analyze both options.
If an equipment's FOG needs to be calculated with 0.15 as a FOG factor and the calculated fuel cost is $80 per hour, what will be the hourly cost for FOG?
💡 Hint: Multiply the FOG factor by the total fuel cost to find the answer.
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