Question

Owning cost of a machine does NOT include

• A. purchase price.
• B. insurance.
• C. interest.
• D. operating cost.

Hint:

Owning cost ≠ machine usage. It includes expenses for owning the machine even if it is idle.

Answer 1

The Correct Option is D

Owning cost refers to all expenses incurred to purchase and retain ownership of a machine, whether or not it is being used. These include:
- Purchase price of the equipment (initial investment).
- Insurance charges to protect the investment.
- Interest or financing charges incurred if the machine was purchased on loan.
- Taxes and depreciation may also be included depending on context.
Operating cost refers to expenses incurred during the use of the machine, such as fuel, lubricants, operator wages, power consumption, and routine maintenance. These costs arise only when the machine is actively working.
Since the question asks which item is NOT part of owning cost, the correct choice is operating cost → option (D).