What are the major cost components that must be considered when pricing out a piece of equipment? How can a contractor manipulate amortization for a piece of equipment to increase or reduce direct costs charged per unit of production? Why are tires on a rubber-tired vehicle not considered for depreciation?
You have just bought a new pusher dozer for your equipment fleet. Its cost is $100,000. It has an estimated service life of four years. Its salvage value is $12,000.
a. Calculate the depreciation for the first and second year using the straight-line and DDB methods.b. The IIT components of ownership cost based on average annual value are:
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