4. Total Cost Overview

Try these first

1. 1.

   What are the two primary categories of equipment costs?

   Hint

   Think about what you pay for an asset versus what it costs to keep it running.

2. 2.

   Define depreciation in simple terms.

   Hint

   Consider how a car loses value as it ages.

3. 3.

   What does total cost consist of?

   • Only ownership costs
   • Only operating costs
   • Both ownership and operating costs

   Hint

   Recall the definitions we've gone through.

4. 4.

   Repairs are considered part of what type of cost?

   • True
   • False

   Hint

   Think about what happens when machinery breaks down.

5. 5.

   A contractor has a dump truck costing ₹7 crores, with a tire cost of ₹70 lakhs. Determine the annual depreciation if the useful life is 15 years.

   Hint

   Don't forget to account for tire cost.

6. 6.

   Given that the annual operating hours of a dump truck are 1,800, with fuel costs calculated at ₹3000, labor at ₹1500, and maintenance at ₹700, what is the total cost per hour?

   Hint

   Total costs must be computed first then divided by operating hours.