Big Dig Cats just bought a new loader including tires for $125,000. The tires are valued at $6,000. In 6 years it is estimated to have a salvage value of $35,000. It is used approximately 2,200 hours per year. Additionally, tax = 1.7%, insurance = 1.1%, and interest = 2.5%. Also, the total average operating cost is $35.55/hr, and the overhead cost is $1,700/year. a. Find the IT charge rate in $/hr using the AAV formula. b. Calculate the total cost per hour.

Big Dig Cats just bought a new loader including tires for $125,000. The tires are valued at $6,000. In 6 years it is estimated to have a salvage value of $35,000. It is used approximately 2,200 hours per year. Additionally, tax = 1.7%, insurance = 1.1%, and interest = 2.5%. Also, the total average operating cost is $35.55/hr, and the overhead cost is $1,700/year. a. Find the IT charge rate in $/hr using the AAV formula. b. Calculate the total cost per hour.

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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