When calculating unit cost for owned equipment, which elements are involved?

The calculation of unit cost for owned equipment involves key components that allow for an accurate assessment of the cost associated with utilizing that equipment. Considering the context of calculating unit cost, the relevant elements are hours used and total yearly cost.

Hours used helps quantify how much the equipment is actually deployed in operations, which ties directly to the utilization of resources. Meanwhile, total yearly cost encapsulates all expenses related to owning the equipment for that year, including depreciation, insurance, maintenance, and financing costs. By combining these two factors, the unit cost can be effectively determined, providing a clearer picture of what it costs on a per-use or per-hour basis to operate that piece of equipment.

Other options do not directly address the comprehensive cost analysis required for calculating unit cost. For instance, purchase price and expected lifespan focus more on the initial acquisition and durability of the equipment, rather than on operational costs. Similarly, unit price and rental costs pertain more to market pricing strategies and leasing arrangements rather than the ownership perspective necessary for a unit cost calculation. Hours used and maintenance costs might reflect usage and upkeep but do not encompass the total financial implications associated with ownership over time.