3.2. Operating Cost

Try these first

1. 1.

   How is depreciation calculated using the straight-line method?

   Hint

   Think about the formula involving initial cost and salvage.

2. 2.

   What does FOG stand for?

   Hint

   Remember the consumables category affecting operating costs.

3. 3.

   What is the primary method used to calculate depreciation in equipment cost estimation?

   • Straight-Line Method
   • Declining Balance Method
   • Sum of the Years' Digits Method

   Hint

   Consider methodologies for asset depreciation.

4. 4.

   True or False: FOG refers to the costs associated with Filters, Oil, and Grease.

   • True
   • False

   Hint

   Concentrate on consumables affecting operational efficiency.

5. 5.

   An excavator costs $120,000 and has an expected salvage value of$15,000 with a lifespan of 10,000 hours. Calculate the hourly depreciation, considering both the Caterpillar and Peurifoy methods.

   Hint

   Apply the depreciation formula properly for both methods.

6. 6.

   You are tasked to estimate the operating costs for a construction project involving various load conditions for equipment. Analyze how each condition (high, medium, low) affects fuel consumption and provide a comparative analysis.

   Hint

   Focus on the relationship between load and fuel consumption patterns.