Today in this article we are going to Factors the running and fixed cost of electric generating station, factors the running and fixed cost of electric generating station. Learn more about If you also want to know then read this post completely.
Fixed Cost – Fixed cost is not related to consumer demand or the production capacity of the plant. Fixed cost depends on the following factors.
(i) Capital Investment – Interest on capital cost, sub-station building, cost of salaries of officers, inspection tax, the fee charged by the municipal corporation for road streets, etc., comes in capital expenditure. Determine fixed cost.
(ii) Interest – To set up the plant, capital has to be borrowed from big traders or banks; interest is charged on this capital at a fixed rate.
(iii) Depreciation – With time, the plant’s life starts decreasing, and the equipment and parts of the plant start getting damaged. For this reason, it becomes necessary to replace them. Apart from this, it becomes necessary to buy modern equipment according to the times due to the age of technology. Keeping all these things in mind, some amount is kept for this work.
(iv) Taxes and Insurance Expenses – The power generation company has to pay tax on capital expenditure and spend money on loss due to fire accident or any other accident and compensation to workers, etc.
Operational or Running Cost-
The operational or running cost is directly related to the power generating unit of the plant.
Current cost depends on the following factors-
(i) Annual cost on fuel expenditure
(ii) Salary of staff required for operations
(iii) Expenditure on raw material and goods needed for repairs
(iv) Annual expenditure on electricity supply
(v) Expenditure on Inspection
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Friends, today you learned Factors the running and fixed cost of electric generating station, factors the running and fixed cost of electric generating station.