Construction Equipment Costs & Management Flashcards
7 cards from real CPE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Construction Equipment Costs & Management flashcards as text
Which of the following is classified as an equipment OWNERSHIP cost rather than an operating cost?
Answer: Depreciation
Depreciation is an ownership cost representing the recovery of capital investment, while fuel, tires, and lubrication are operating costs incurred through use.
Equipment standby costs in estimating typically include:
Answer: Ownership costs plus a partial allowance for operating costs
Standby costs include full ownership costs (which continue regardless of use) plus reduced operating costs for items like minimal maintenance and lubrication.
The straight-line depreciation method calculates annual depreciation by:
Answer: Dividing cost minus salvage value by the useful life in years
Straight-line depreciation spreads the depreciable cost (purchase price minus salvage value) evenly across each year of the equipment's useful life.
The 'economic life' of construction equipment is best defined as:
Answer: The period during which it is most cost-effective to own and operate the equipment
Economic life is the period of optimal cost-effectiveness, ending when rising repair and operating costs make replacement more economical than continued ownership.
Which reference publication is most widely used by estimators to obtain construction equipment rental rates and depreciation schedules for cost claims?
Answer: EquipmentWatch (formerly Dataquest Blue Book)
EquipmentWatch, formerly known as the Dataquest Blue Book, is the industry-standard reference for equipment ownership costs, depreciation, and rental rate data used in claims and estimates.
When calculating total equipment cost per hour, which of the following components is part of the OPERATING cost category?
Answer: Fuel and lubricant consumption
Fuel and lubricants are consumed during equipment operation and are classified as operating costs, whereas interest, taxes, and insurance are ownership (fixed) costs.
Section 179 of the IRS tax code is significant in equipment cost planning because it allows construction firms to:
Answer: Immediately expense the full purchase cost of qualifying equipment in the year of purchase
Section 179 allows businesses to deduct the full cost of qualifying equipment purchases in the year placed in service, improving cash flow compared to spreading deductions over multiple years.