Fixed charges depreciation

Thus there are two types of expenses those that are independent of the amount of usage and those that depend on how much the car is driven. The former are known as fixed charges and include depreciation, insurance, interest costs, garage expenses, driver s license, and city and state taxes. 

For the chemical plant the fixed charges, those that do not vary with the throughput, are depreciation, taxes, and insurance. The labor, utilities, supplies, and sales also cost more per pound of product if the plant is not running at full capacity, but their total cost is less than if the plant were running at full capacity. 

Boiler steam may be purchased at 0.2/1000 kg and the vapour produced may be assumed to be 0.85N kg/kg of boiler steam. Assuming that interest on capital, depreciation, and other fixed charges amount to 45 per cent of the capital involved per annum, and that the cost of labour is constant and independent of the number of effects employed, determine the number of effects which, based on the data given, will give the maximum economy. 

Assume that the plant in which this equipment is installed will operate 10 years, that a tax rate of 34%/year is applicable, and that a charge of 10% of the capital cost per year for depreciation will be employed over the entire 10-year period, that fixed charges including maintenance incurred by installation of this equipment will amount to 10%/year of the investment, and that a minimum acceptable return rate on invested capital after taxes and depreciation is 15%. Determine which of the two alternative installations should be selected, if any. 

Fixed charges are expenses which remain practically constant from year to year and do not vary widely with changes in production rate. Depreciation, property taxes, insurance, and rent require expenditures that can be classified as fixed charges. 

Certain expenses are always present in an industrial plant whether or not the manufacturing process is in operation. Costs that are invariant with the amount of production are designated as fixed costs or fixed charges. These include costs for depreciation, local property taxes, insurance, and rent. Expenses of this type are a direct function of the capital investment. As a rough approximation, these charges amount to about 10 to 20 percent of the total product cost. 

To obtain reliable estimates of investment returns, it is necessary to make accurate predictions of profits and the required investment. To determine the profit, estimates must be made of direct production costs, fixed charges including depreciation, plant overhead costs, and general expenses. Profits may be expressed on a before-tax or after-tax basis, but the conditions should be indicated. Both working capital and fixed capital should be considered in determining the total investment ... 

X = no. of effects Steam costs per day Fixed charges minus depreciation per day Depreciation per day Labor, etc., per day Total cost per day... 

A multiple-effect evaporator is to be used for evaporating 400,000 lb of water per day from a salt solution. The total initial cost for the first effect is 18,000, and each additional effect costs 15,000. The life period is estimated to be 10 years, and the salvage or scrap value at the end of the life period may be assumed to be zero. The straight-line depreciation method is used. Fixed charges minus depreciation are 15 percent yearly based on the first cost of the equipment. Steam costs 1.50 per 1000 lb. Annual maintenance charges are 5 percent of the initial equipment cost. All other costs are independent of the number of effects. The unit will operate 300 days per year. If the pounds of water evaporated per pound of steam equals 0.85 x number of effects, determine the optimum number of effects for minimum annual cost. 

The operating cost per year, including labor, fuel, water, feed, regeneration, fixed charges minus depreciation, and repairs and maintenance, equals 2,250,000 (operating costs not included in this value are the cost of the additional make-up carbon necessary and depreciation). 

It is estimated that the life period of the installation will be 20 years with negligible scrap value. The sum of fixed charges excluding depreciation is 10 percent, and maintenance is estimated to be 2 percent annually of the F.C.I. 

Overhead administration, depreciation, insurance, fixed charges. 0.46... 

Fixed costs (fixed charges), which are incurred for a long period of time, tend to be unaffected by fluctuations in the level of production activity. They include depreciation of equipment and buildings, interest charges for the investment capital, plant protection, insurance, fixed part of taxes and rents, fixed part of maintenance costs, and executive salaries (administration, overhead). 

In computing the cost of power, the fixed charges on capital investment of depreciating items are assumed to be 15%/yr, including depreciation, interest, return on investment, insurance, and taxes. I ixed charges on nondepreciating items are assumed to be 4%/yr. Fuel, D2O, and fertile materials are assumed to be nondepreciating materials. 

Indirect charges are 16% of fixed investment per ton per year 10% depreciation 1.5%, insurance 3%, maintenance (labor, materials) 1.5%, general sales and marketing. 

Book values of fixed assets are determined by the balance-sheet annual depreciation charges Abd, which do not affect working capital. Although the accounting gain or loss on the sale of a fixed asset is based on its book value, working capital is not affec ted by depreciation assessments. 

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