Practice Operating Cost (2.2) - Equipment cost – Caterpillar and Peurifoy method

Practice: Operating Cost

Lesson 2.2Equipment cost – Caterpillar and Peurifoy method

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9 questions

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6 sample questions

Question 1.
What are the main components of operating costs?
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Remember the acronym FMLM.
Question 2.
Define the Peurifoy Method.
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Think about 'time value' in its definition.
3Question 3.
What does the Caterpillar method primarily focus on?
- Fuel cost only
- Ownership and Operating Costs
- Only labor costs
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Consider what this method is used for in construction.
4Question 4.
The Peurifoy method considers what key financial concept?
- True: Time value of money
- False: Only upfront costs
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Focus on how time affects cost estimation.
Question 5.
You have an excavator with a purchase price of $200,000, a salvage value of $20,000, and a tire cost of $10,000. It has an estimated lifespan of 15,000 hours. Calculate the hourly depreciation.
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Step through the formula, subtract first before dividing.
Question 6.
Discuss the potential financial impact of inaccurately estimating fuel consumption based on performance handbooks.
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Consider both sides of the estimation inaccuracies.

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