Chapter 22 Problem 1: Please provide the hourly cost of ownership and operation of the excavator.
CONCLUSION Equipment costs include the ownership costs of deprecia. tion and interest, taxes and licenses, insurance, and storage; and the operation costs of tires and other wear items, fuel, lubricants and filters, and repair reserves. Data to calculate these costs are available from historical data and the equip- ment manufacturer the loader. The life of the tires is estimated to be 3,600 hours. Tire repairs are expected to be 15% of the cost of the tires. The interest rate is 7.5%. The company adds to the interest rate 1.5% for property taxes, 2.0% for insur- ance, and 1.0% for storage. The fuel consumption is es- timated to be 10.75 yal/hr, at an estimated cost of $2.10/gal. It is estimated that under normal conditions its hourly lubricant consumptions are as follows: crankcase, 0.064 gal/hr; transmission, 0.018 gal/hr; final drives including differential, 0.039 gal/hr; and hydraulic controls, 0.035 gal/hr. Two tubes of grease are used dur- ing each 8-hour day to lubricate the grease fittings. The local costs of lubricants are as follows: oil for the crankcase, $6.99/gal; transmission fluid, $5.49/gal; oil for the final drives, $8.79/gal; hydraulic fluid, $3.41/gal; and grease, $3.89/tube. The filters for the loader cost PROBLEMS 1. The purchase price of a loader including the tires, sales tax, and all other costs associated with its purchase is $210,000. The life of the loader is 9 years, at which time it will have an estimated salvage value of $23,000. The replacement cost of the tires is $11,000 for all tires on Equipment Costs 253 $0.44/hr of operation, including the labor to install them. The estimated repair reserve is $14.40/hr. Using 1,500 billable hours per year, determine the hourly own- ership and operation cost of the loader. 2. The purchase price of the hydraulic excavator, including sales tax and all other costs associated with its purchase, is $150,000. The life of the excavator is 6 years, at which time it will have an estimated salvage value of $20,000 The interest rate is 8.25%. The taxes and licensing costs are $3,220/yr, the insurance costs are $2,930/yr, and the storage costs are $2,110/yr. The fuel consumption is estimated to be 3.0 bal/hr, at an estimated cost of $1.85/gal. It is estimated that under normal conditions, its hourly lubricant consumptions are as follows: crankcase, 0.008 gal/hr; final drives, 0,001 yal/hr; and hydraulic controls, 0.021 gal/hr. One tube of grease is used during each 8-hour day to lubricate the grease fit- tings. The local costs of lubricants are as follows: oil for the crankcase, $7.43/gal; oil for the final drives, $8.99/gal; hydraulic fluid, $3.56/gal; and grease, $4.01/tube. The filters for the excavator cost $0.25/hr of operation, including the labor to install them. The esti- mated repair reserve is $4.20/hr. Using 1,400 billable hours per year, determine the hourly ownership and op- eration cost of the excavator. 3. Set up Excel Quick Tip 22-1 in Excel
