Practice Cumulative Usage And Costs Per Hour (3.4) - Economic Life of a Machine

Practice: Cumulative Usage and Costs per Hour

Lesson 3.4Economic Life of a Machine

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9 questions

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6 sample questions

Question 1.
Define economic life in your own words.
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Think about the meaning of cost-effectiveness in operating machinery.
Question 2.
What are the main reasons for costs to increase after economic life?
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Consider factors affecting the machine's usability over time.
3Question 3.
What is the economic life of a machine?
- Time when maintenance costs are minimum
- Duration before significant cost increases
- Time when the machine can be sold for maximum value
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Consider the term 'economic'.
4Question 4.
True or False: Cumulative costs per hour decrease as the usage of a machine increases.
- True
- False
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Think about how expenses are allocated.
Question 5.
A machine is purchased at ₹45,00,000 with a 10-year lifespan. Calculate its depreciation at the end of the fifth year using the double declining balance method.
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First calculate the depreciated value after the previous year, then apply the formula.
Question 6.
An old excavator has been used for 4,000 hours with increasing maintenance costs each year: year 1 = ₹50,000, year 2 = ₹70,000, year 3 = ₹90,000. Calculate the average maintenance cost per hour at this point.
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Total the costs, then divide by total usage.

5 more questions in this section. Enroll free to practise them all.