NSC Cost Estimation & Budgeting 3

Question 1

A propane forklift costs $0.85 per hour to fuel. An electric model costs $0.22 per hour to charge. If both operate 2,000 hours per year, what is the annual fuel/energy savings with the electric model?

Accepted Answer

$1,260

Answer

($0.85 − $0.22) × 2,000 hours = $0.63 × 2,000 = $1,260 annual savings with the electric forklift.

Question 2

Which depreciation method results in the highest expense in the first year of forklift ownership?

Accepted Answer

Double declining balance

Answer

Double declining balance applies twice the straight-line rate to the remaining book value, front-loading depreciation expense in the earliest years.

Question 3

In forklift fleet budgeting, what does the term 'lifecycle cost analysis' primarily evaluate?

Accepted Answer

Total costs from acquisition through disposal over the equipment's useful life

Answer

Lifecycle cost analysis sums all costs — purchase, operation, maintenance, and disposal — across the entire service life to compare true equipment economics.

Question 4

A tire replacement for a sit-down counterbalanced forklift costs $420 per tire. If the unit requires all four tires replaced every 18 months, what is the annualized tire cost?

Accepted Answer

$1,120

Answer

4 tires × $420 = $1,680 per replacement; annualized over 18 months = $1,680 ÷ 1.5 years = $1,120/year.

Question 5

Which cost is classified as a variable operating cost rather than a fixed cost in a forklift budget?

Accepted Answer

Propane fuel consumed per shift

Answer

Propane consumption varies directly with operating hours, making it a variable cost, unlike fixed expenses such as lease payments or insurance premiums.

NSC Practice Test

NSC Practice Test

NSC Cost Estimation & Budgeting 3