Cost Estimation & Budgeting Flashcards
7 cards from real NSC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Estimation & Budgeting flashcards as text
Which metric best measures forklift fleet productivity in relation to operating cost?
Answer: Cost per pallet moved or cost per hour utilized
Cost per pallet moved or cost per utilized hour ties total fleet expense directly to productive output, enabling meaningful efficiency comparisons.
An operator accident causes $14,000 in forklift repair, $3,200 in product damage, and 16 hours of lost productivity at $85/hour. What is the total incident cost?
Answer: $18,560
$14,000 + $3,200 + (16 × $85) = $14,000 + $3,200 + $1,360 = $18,560 total incident cost.
When a forklift is financed through a capital lease rather than an operating lease, how is it reflected on the company's financial statements?
Answer: As an asset and corresponding liability on the balance sheet
Capital leases are treated like purchases; the forklift appears as an asset and the lease obligation as a liability on the balance sheet.
Which condition most strongly indicates that a forklift should be replaced rather than repaired in a budget analysis?
Answer: Annual repair costs exceed 50–75% of the unit's replacement cost
When annual repair bills approach or exceed 50–75% of what a replacement would cost, fleet management best practice calls for replacement to avoid diminishing returns.
A warehouse budgets $2,400 per forklift annually for battery watering and maintenance. If switching to lithium-ion batteries eliminates this cost but adds $8,000 per truck upfront, what is the simple payback period?
Answer: 3.3 years
$8,000 ÷ $2,400 per year = 3.33 years, meaning the lithium-ion premium pays back in approximately 3.3 years through eliminated watering maintenance.
In OSHA's cost model for workplace incidents, which category represents 'indirect costs' of a forklift accident?
Answer: Lost productivity, investigation time, and retraining costs
Indirect costs include productivity losses, accident investigation time, retraining replacements, and morale impacts — costs that don't appear on a direct insurance claim.
A facility uses 10 propane forklifts but has identified that peak utilization never exceeds 70%. What fleet optimization strategy would reduce annual operating costs most directly?
Answer: Right-size the fleet by reducing to 7 units and relying on short-term rentals for peak demand
Reducing to 7 units matched to average demand and renting for peak periods eliminates fixed costs on idle forklifts while maintaining capacity flexibility.