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Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners
determine the direct and indirect costs of a product or system. It is a management
accountingconcept that can be used in full cost accounting or even ecological economics where
it includes social costs.
For manufacturing, as TCO is typically compared with doing business overseas, it goes beyond
the initial manufacturing cycle time and cost to make parts. TCO includes a variety of cost of
doing business items, for example, ship and re-ship, and opportunity costs, while it also
considers incentives developed for an alternative approach. Incentives and other variables
include tax credits, common language, expedited delivery, and customer-oriented supplier visits
ownership proposition. The five year cost of ownership for major hardware and software systems
from any vendorcan be five to ten times the hardware and software purchase price.
Today, TCO analysis is used to support acquisition and planning decisions for a wide range of assets
that bring significant maintenance or operating costs across ownership life. Total cost of ownership
(TCO) analysis is center stage when management is faced with acquisition decisions for computing
systems, vehicles, buildings, laboratory equipment, medical equipment, factory machines, and private
aircraft, for instance. Today, TCO analysis for these kinds of assets is in fact a central concern in the
following:
Vendor selection.
tax savings as its primary objective. It usually gives little consideration to actual year-toyear change in value. Thus, for accounting purposes, other methods are more
appropriate.
For tax purposes, property is classified as follows:i) 3 year property - automobiles and light-duty trucks used for business purposes and
certain special tools, and depreciable property with a midpoint life of 4 years or less.
ii) 5 year property - most farm equipment, grain bins, single purpose structures and
fences, breeding beef and dairy cattle, office equipment and office furniture.
iii) 10 year property- includes depreciable property with an expected life between 10 and
12.4 years.
iv) 15 year property - buildings.
The straight line method computes depreciation, Ds, as follows:
where:
OC = Original cost or basis
SV = Salvage value
L = expected useful life of the asset in the business.
Declining balance method calculates depreciation as:Dd = RV x R
where:
RV = undepreciated value of the asset at the start of the accounting period such that, in
year 1, RV = OC, and in succeeding years,
RVi = [RVi-1 - Dd,i-1] x R (with salvage value not being deducted from original value before
computing depreciation),
R = the depreciation rate, which may be up to twice the rate of decline, 1/L, allowed
under straight line method.
Sum of the year-digits method estimates the depreciation of an asset as follows:-
where:
RY = estimated years of useful life remaining
S = sum of the numbers representing years of useful life (i.e. for an asset with 5 years
useful life, S would be 1+2+3+4+5 = 15).
b) Interest costs (rates) are incurred by a company when owned or borrowed funds are
invested in durable assets, because such money is tied up and cannot be used for other
purposes. On borrowed money, there will be a regular interest payment, a standing
obligation which must be met regardless of the level of use of the asset purchased with
the borrowed money. Also, an interest charge should be calculated on equity capital. In
this case, the charge would be an opportunity interest cost. An annual charge should be
made because the money invested has alternative productive uses, which may range
from earning interest on a savings account to increasing production.
c) Repairs costs are principally variable costs incurred on assets because of the level of
use of the assets through wear and tear. Some durable assets, however, deteriorate with
time even though they are not used. Fences, buildings and some moving parts on
machinery and equipment are prime examples, although they deteriorate even more
rapidly with use.
d) Taxes are fixed costs that are usually incurred on machinery, buildings and some
other durable assets. Taxes are usually not related to the level of use or productive
services provided. Thus, any investment analysis that ignores the annual tax obligation
associated with the proposed investment will be incomplete.
e) Insurance costs are also fixed costs that are incurred when a financed asset is
purchased and has to be protected against fire, weather, theft, etc. Usually, lenders
require that a financed asset be insured as a meant of security for the loan. Some
operators, particularly those with low equity, also insure some of their more valuable
assets because of the strain the loss of those assets would place on the financial
condition of the business. In this country, the major insurance companies are Old Mutual
Insurance and General Accident Insurance, Minet Insurance, Prudential Insurance, etc.
Now attempt exercise 3.5.
Exercise 3.5 Computation of depreciation
Using the straight line, declining balance, and sum of the year-digits methods, compute
and tabulate the depreciation of a $1,000 asset with an estimated 10 years' life and
projected salvage value of 10% of the original cost. (Assume for the declining balance
method a depreciation rate calculated as 20% of the value at the beginning of the year.
Usually the rate may not be greater than twice the rate which would be used under the
straight line method).
The first construction cranes were invented by the Ancient Greeks and were powered by men or
beasts of burden, such as donkeys. These cranes were used for the construction of tall buildings.
Larger cranes were later developed, employing the use of human treadwheels, permitting the
lifting of heavier weights. In the High Middle Ages, harbour cranes were introduced to load and
unload ships and assist with their construction some were built into stone towers for extra
strength and stability. The earliest cranes were constructed from wood, but cast
iron and steel took over with the coming of the Industrial Revolution.
For many centuries, power was supplied by the physical exertion of men or animals, although
hoists in watermills and windmills could be driven by the harnessed natural power. The first
'mechanical' power was provided by steam engines, the earliest steam crane being introduced in
the 18th or 19th century, with many remaining in use well into the late 20th century. Modern
cranes usually use internal combustion engines or electric motors andhydraulic systems to
provide a much greater lifting capability than was previously possible, although manual cranes
are still utilized where the provision of power would be uneconomic.
Cranes exist in an enormous variety of forms each tailored to a specific use. Sometimes sizes
range from the smallest jib cranes, used inside workshops, to the tallest tower cranes, used for
constructing high buildings. Mini-cranes are also used for constructing high buildings, in order to
facilitate constructions by reaching tight spaces. Finally, we can find larger floating cranes,
generally used to build oil rigs and salvage sunken ships.
Some lifting machines do not strictly fit the above definition of a crane, but are generally known
as cranes, such as stacker cranes and loader cranes
inShare
Cranes have played an important part in constructing houses, buildings, cities, and nations
throughout history. Today, cranes are hard at work in factories, at shipyards, on container vessels
and even on barges.
Ritchie Bros. helps companies all over the world sell and buy cranes, including these five mobile
cranes commonly found at construction sites and at our ports:
This 2009 Grove TMS880E 80 ton hydraulic truck crane sold for US $480,000 at our Denver, CO
auction in 2011
This 2008 Terex Demag AC60/3L 60 ton all terrain crane sold for EUR $230,000 at our Ocana, Spain
auction in 2011
This 2009 Grove RT540E 40 ton rough terrain crane sold for US $315,000 at our Dubai auction in
2011
This 2008 Liebherr HS835HD 50 ton crawler crane sold for EUR $227,500 at our Ocana, Spain auction
in 2011
Crawler Cranes
Crawler cranes are a type of tracked mobile crane available with either telescopic or lattice
booms. Because they are self-propelled they are able to move around a construction site and
perform jobs without much set-up. They are however very expensive to transport from site to site
because of their great size and weight.
Crawler crane tracks provide additional stability, allowing a crawler crane to operate without the
use of outriggers, though some models do include them.
This 2006 Grove YB5518 18 ton carry deck crane sold for US $77,500 at our Fort Worth, TX auction
in 2012
Reciprocating pump
A reciprocating pump is a positive plunger pump. It is often used where relatively small quantity
of liquid is to be handled and where delivery pressure is quite large.In reciprocating pumps, the
chamber in which the liquid is trapped, is a stationary cylinder that contains piston or plunger
Piston pump, plunger pumps, and diaphragm pumps are example of reciprocating pump.
Reciprocating pumps can have two types of reciprocating part, a piston or a diaphragm and based on
this, reciprocating pumps can be piston or diaphragm pumps. Each type has different features
suitable for specific applications. Read in this article construction, working and variants of Piston
Pumps.
the cylinder.
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FLUID PUMPS
Fluid Pump or Hydraulic Pump is a machine which transfers the energy from its moving parts to the
fluid passing through the machine. The energy transferred from the Pump to the fluid appears as the
pressure and velocity of the fluid. Know more about Fluid or Hydraulic Pumps in this article series .
What is a centrifuge?
Photo: A clothes washer drum is a type of centrifuge. During the wash cycle, the paddles agitate the
clothes in the soapy water. When it comes to the spin, holes in the drum let the water out.
Hold something heavy in one hand and whirl your arm around your head.
Feel a force that seems to be pulling your shoulder out of its socket? That's
the principle of the centrifuge at workand you can look at it from two
different angles. In popular books and magazines, people talk about
something called centrifugal force: the force that seems to make things
shoot outward when they go round in a circle. So, when a bus goes around
a bend at high speed, you'll read that it's centrifugal force trying to tip the
thing over. When your clothes are spinning in the drum, it's centrifugal force
that throws the water out through the little holes so your washing ends up
much drier.
Or is it?
Centrifugal force or centripetal force?
Science teachers will tell you this is wrong: there is actually no such thing
as centrifugal force. We can understand what's really happening by
considering Isaac Newton's famous laws of motion. When a car begins to
enter a bend, its natural tendency is to keep going in a straight lineand it
will do so unless a force acts on it. When it follows the bend, it does so
because there's a force (called centripetal force) constantly tugging it
inward from its straight line course. What we see as the centrifugal force is
really the car's tendency to go straight, if left to its own devices.
Anytime you hear people talking about centrifugal force, you can quietly
correct them (in your own mind, to be polite!) and translate what they're
saying into centripetal force. So "centrifugal force gets your washing dry
because it makes the water fly out" becomes "Centripetal force between
your clothes and the inside of the drum pushes them around in a circle.
There's nothing to give the water the same kind of push because it can slip
straight through the drum holes. The clothes experience centripetal force,
the water doesn't. The clothes go round in a circle, the water goes in a
straight linestraight through the holes. And that's what gets your washing
dry."
You can also see now where these two funny words come from. Centrifugal
(pronouncedsen-tree-few-gul or sen-trif-ugul is related to the word "fugue",
from the latin word for flight, so we're talking about something trying to get
away from the center. Centripetal (pronounced sen-trip-itul or sen-tree-peetul) comes from the Latin "petere", meaning seek, so we're describing a
force that makes things seek the center:
Centrifugal = "center fleeing"
Centripetal = "center seeking"
How big is centripetal force?
Why is there always a centripetal force when things move in circles? Think
back to the laws of motion. If something is following a curved path, its
velocity is changing all the time because its direction is changing all the
time. If the velocity is changing, it's accelerating (even if its speed is
constant). If it's accelerating, a force must be actingsometimes a very big
force. All these statements follow directly from the laws of motion.
Photo: Now that's what I call a centrifuge! You can see how big it is from the little man standing in the
bottom, center, wearing a red safety hat. This is the launch-phase simulator that NASA uses to see if
pieces of spacecraft (and even whole satellites) can withstand extreme forces. The huge spinning
arms are powered by two 1250-horsepower motors and produce forces up to 30g (30 times the force
of gravity or 15 times the force you feel on a typical roller coaster). Photo by courtesy of NASA
Goddard Space Flight Center and Great Images in NASA.
Spin things at high speeds and you build up big forces very quickly. You'll
have seen that very clearly if you've ever washed something like a heavy
pair of curtains in a clothes washing machine and they've bunched up on
one side of the drum. When it comes to the final spin, the machine will be
banging and clattering about and doing its level best to escape from your
kitchen (probably damaging itself in the process). When things spin at high
speed, the forces involved can be huge. That's why it's best to balance your
washing machine with a mixed load (never, ever wash one item by itself)
and why you need to balance laboratory centrifuges very carefully as well.
How big are centripetal forces, exactly? The laws of physics tell us that the
centripetal force needed to make an object go round in a circle is given by
this little equation:
F =(mv2)/r
Here, m is the mass of the object, v is the velocity, and r is the radius of the
circle. So the bigger the mass of the object and the faster it goes, the more
force is needed to keep it turning.
Let's try out some real numbers. Say you have a 1000kg car going round a
bend of 50m radius at 40mph (roughly 20m/s). The force between the tires
and the road is 1000 x 20 x 20 / 50 = 8000 newtons or roughly 10 times a
typical person's weight. Where does the centripetal force come from when
a car goes round a bend? There's only one place it can come from: the
friction between the tires and the road. Ten times a person's weight is quite
a lot of force for four little rubber tires to provide, especially when you
consider that only a tiny patch of each tire is ever touching the road
surface. Now make the bend twice as tight and you'll see the force is
doubled to 16,000 newtons (because r is halved). If the car doubles its
speed (v is doubled), the force is quadrupled to 32,000 newtons (40 times a
person's weightor a force equal to 10 people weighing on each tire).
That's why you're much more likely to skid at high speeds: friction between
your car tires and the road can't provide enough centripetal force to keep
you going in a circle, so you whiz off at a tangent: you bow to your natural
tendency and keep going in a straight line.
Now forget all about the spinning: if you need a big force quite quickly, a
centrifuge is a really handy way to generate one. Because you're spinning
on the spot, you don't need lots of space. That makes centrifuges perfect
for use in scientific laboratories. One of the most common uses for
centrifuges is in separating mixtures of things. A washing machine is a
mixture of clothes and water and the spinning drum separates those very
efficiently. Laboratory centrifuges are used to separate things like blood,
which consists of red blood cells suspended in plasma (a yellowish fluid).
Put some blood in a test-tube and spin it at high speed and you separate
out these two components very quickly, with the plasma at the top of the
tube and the red blood cells at the bottom. (They travel to the bottom
because they're heavier, so need more centripetal force to push them round
in a circle. The force comes from the bottom of the tube pushing inward
against the blood cells clumped there.)
Photo: Left: Loading up a laboratory centrifuge with samples in test tubes. Note that you can do lots of
test tubes at the same time, but you have to make sure the machine is balanced with matching
numbers of tubes on each side of the spinning arms. Photo by Scott H. Spitzer courtesy of US Air
Force and Defense Imagery.
Right: This is what samples look like when they've been centrifuged. The lighter components (almost
transparent here and quite hard to make out) are at the top of the tube, while the heavier ones (darker
here) are at the bottom. Photo by Jim Yost Photography courtesy of US DOE/NREL (Department of
Energy/National Renewable Energy Laboratory).