THINK SHARP-SAVE MONEY ON EQUIPMENT COSTING

The economic factors which need to be considered by every contractor are: the economic life cycle i.e. how economical and profitable is the equipment at any point in the life of that machine; the maintenance of accurate records for the equipment; and qualified assistance in areas such as taxes, law, and optimum performance of the equipment. A curve is used to represent the economic life cycle of a piece of equipment which depicts the level of profitability of that piece. One of three methods may be used to obtain the maximum profit from machines or equipment: in the intitutive method, the contractor who is familiar with the type and amount of wear on a piece of equipment, may be able to predict the best time to trade it; computerized systems may be used by large contractors; the cumulative hourly cost method may be used by a contractor irrespective of the number of pieces of equipment. In the last method, the total cumulative costs of a machine divided by the total cumulative hours of operation of that machine equals the cumulative cost per hour. Five variables which affect these costs are: depreciation and replacement costs; investment costs; maintenance and repair costs; and downtime and obsolescence costs. Funded depreciation, the double declining balance, the asses depreciation range, and basic rules for the investment tax cradit are reviewed. Each of the other (4) cost factors are also discussed in detail.

  • Corporate Authors:

    Dun Donnelley Publishing Corporation

    222 South Riverside Plaza
    Chicago, IL  United States  60606
  • Publication Date: 1975-3

Media Info

  • Features: Figures;
  • Pagination: p. 30-34
  • Serial:
    • Roads and Streets
    • Volume: 118
    • Issue Number: 3
    • Publisher: Donnelley (Reuben H) Corporation

Subject/Index Terms

Filing Info

  • Accession Number: 00097421
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 13 1975 12:00AM