Greenacres Construction Company wants to compute the life cycle costs of equipment used in its proj- pets es ects. Greenacres will use these life cycle costs to bid and cost its construction jobs. Although no rules (LO 4)

govern life cycle costing by private companies, Greenacres wants to account for as much of its operating and ownership costs as possible to be sure that it bids and costs its jobs fully. Analysts have obtained the following information for a backhoe.

BUTCHASSLCOST arent an are ee crey tectct arate nee $135,000 Resale cost at replacement ...........ceeeeeeeeeee 47,250 WSSIUMe OAC mee Meee areal me eon emer if OMerallimOMOULS PSR VSAM aaa ce gsi esse eae 1,200 OpConlimityCOSuOl Capitals cet 16%

ANITUAINMSUTAMGE COS s wrarrsceaeec eee-e eeaeeren:ny ee$ 768 PANG UA MORON GlaX cern meatnecne eee tseetetr oan Se edelats)

Fuel consumption per hour, gallons.............0.0.. 5 RUGICOSTOCIs@ al lOli en cnt ents cemeeheeasl S W225 Annual scheduled maintenance Cost ................ $ 7,344 PNGMUIAIKe Oe C OSlierer tebe tn eetee aa mne aan tare $ 5,400 Hourly operator cost (wage 1 benefits).............. $ 20.00 Required

a. Compute the life cycle ownership, operating, and total costs per hour for the backhoe.

b. Prepare a bid price on a job that has the following characteristics:

DITeCtlabOmnOUlS Maren antec chertatiers Giteemenalcaes 600 Direct labor hourly rate (wage + benefits)............ $18.40 Eotioment(DackhOe) MOUNTS tara yssern ese: 120 GSonsiiGlonmialChal Seem: ar a mmeereseteese. $5,500 Overhead rate per direct labor Nour... $ 9.80 Overhead rate per equipment hour... Si)

HANG Stratton TetUnMOMSGlCS es eaterncercseceee -- -- 25%