3.2.2. FOG Cost Calculation

Try these first

1. 1.

   What does FOG stand for?

   Hint

   Think about consumables for machinery.

2. 2.

   How do you calculate hourly depreciation?

   Hint

   Recall the formula shared in class.

3. 3.

   What does FOG stand for?

   • Fuel
   • Oil
   • Grease
   • Filter
   • Oil
   • Grease
   • Filter
   • Oil
   • Gas

   Hint

   Consider the essential maintenance items.

4. 4.

   True or False: The Peurifoy method ignores the time value of money.

   • True
   • False

   Hint

   Think about the importance of cash flow timings.

5. 5.

   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.

6. 6.

   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.