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Saturday, October 25, 2014

Question

I am bidding on auto scrubbing a 40,000 square foot warehouse. I know what my labor will cost, but I donít know how to figure for the scrubber which I already own and use other places. How do you figure the cost of an expensive piece of machinery (scrubber) for the total bid price?


Answer

Since there is no rental fee for the scrubber, normally it does not become a line item added to the cost or bid projection. Your accountant may suggest a different classification, but usually your equipment expense, as a percent of labor, will display the depreciated cost of the equipment. Also, if you include replacement costs in your budget, you will have the backend covered. Your current equipment expense would go into calculating your breakeven point, to which you add your desired net profit. So as long as your equipment expense is included in operating costs, there is no need to add it a second time.

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