What will be the per-hour equipment charge for equipment costing $300,000 with a salvage value of $60,000 after 6 years?

To determine the per-hour equipment charge, we begin by calculating the depreciation of the equipment over its useful life. The equipment cost is $300,000, and after 6 years, it has a salvage value of $60,000.

First, we need to calculate the total depreciation over the 6 years:

• Total depreciation = Initial cost - Salvage value
• Total depreciation = $300,000 - $60,000 = $240,000

Next, we'll find the annual depreciation by dividing the total depreciation by the useful life:

• Annual depreciation = Total depreciation / Useful life
• Annual depreciation = $240,000 / 6 years = $40,000 per year

Now that we have the annual depreciation, we need to convert this into a per-hour charge. Assuming a standard number of operational hours per year, commonly used is 2,000 hours (which accounts for a full-time work schedule excluding holidays and downtime).

Calculating the per-hour charge:

• Per-hour charge = Annual depreciation / Total hours per year
• Per-hour charge = $40,000 / 2,000 hours = $20 per hour

However, the per-hour charge would typically also include additional costs associated with ownership of