Answered: > Useful life = 5 years > Hours used…

> Useful life = 5 years > Hours used per year 1800 > Maintenance and repair = 130% c > Tire cost = 5,000 birr > Tire life = 4,000 hours Maintenance and renairs (tires) =

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2. Calculate the ownership cost per hour for a dump truck powered by a 120-hp gasoline
engine based on the following data:
> Purchase price = 175,000 birr
> Freight charges = 2,000 birr
> Estimated salvage value = 57,500 birr
> Operation factor 40%
> Useful life = 5 years
> Hours used per year = 1800
> Maintenance and repair = 130% of annual depreciation
> Tire cost = 5,000 birr
> Tire life = 4,000 hours
> Maintenance and repairs (tires) = 15% of tire depreciation
> Gasoline fuel price =4.0 birr /gallon
> Fuel consumption = 0.06 gallon/hp/hr
> Lube oil cost = 10% of fuel
> Interest rate () = 10%

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