Question

Calculate the total effective hourly cost for a contractor who purchased a 115,000-lb, 385-hp gasoline-engine Power Shovel for $412,500. The machine has a set of tires that costs $12,000 and lasts for 5,000 hours. Salvage value is expected to be $44,000 at the end of its 7 years useful life. Major maintenance and repairs would accumulate annually at 70% of annual equipment depreciation cost. Tire repairs are 30% of tire depreciation. Annual percentage rate for Interest is 9%, while Insurance and Taxes is 6%. Equipment usage will average 2,400 hours per year. The cost of fuel is $3.25/gal and oil costs $9.30/gallon. Fuel consumption rate is 0.06 gallons per HP-hour, while oil consumption rate is 0.006 LB/HP-hour. Operating factor is 0.85; crankcase capacity is 8 gallons; and the number of hours between oil changes is 96 hours. Operators wage is $45/hr.

Answer 1