Calculation of Machine Hour Rate

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Machine Hour Rate Calculator

function calculateMachineHourRate() { var directLabourCost = parseFloat(document.getElementById("directLabourCostPerHour").value); var consumablesCost = parseFloat(document.getElementById("consumablesCostPerHour").value); var maintenanceCost = parseFloat(document.getElementById("maintenanceCostPerHour").value); var depreciationCost = parseFloat(document.getElementById("depreciationCostPerHour").value); var overheadCost = parseFloat(document.getElementById("overheadCostPerHour").value); var resultDiv = document.getElementById("machineHourRateResult"); resultDiv.innerHTML = ""; // Clear previous results if (isNaN(directLabourCost) || isNaN(consumablesCost) || isNaN(maintenanceCost) || isNaN(depreciationCost) || isNaN(overheadCost)) { resultDiv.innerHTML = "Please enter valid numbers for all fields."; return; } var totalMachineHourRate = directLabourCost + consumablesCost + maintenanceCost + depreciationCost + overheadCost; resultDiv.innerHTML = "

Machine Hour Rate:

$" + totalMachineHourRate.toFixed(2) + ""; } .machine-hour-rate-calculator { font-family: sans-serif; border: 1px solid #ccc; padding: 20px; border-radius: 8px; max-width: 500px; margin: 20px auto; background-color: #f9f9f9; } .machine-hour-rate-calculator h2 { text-align: center; color: #333; margin-bottom: 20px; } .calculator-inputs .input-group { margin-bottom: 15px; display: flex; align-items: center; justify-content: space-between; } .calculator-inputs label { font-weight: bold; margin-right: 10px; flex-basis: 50%; } .calculator-inputs input[type="number"] { padding: 8px; border: 1px solid #ccc; border-radius: 4px; width: 45%; } .machine-hour-rate-calculator button { background-color: #4CAF50; color: white; padding: 10px 15px; border: none; border-radius: 4px; cursor: pointer; font-size: 16px; width: 100%; margin-top: 15px; } .machine-hour-rate-calculator button:hover { background-color: #45a049; } .calculator-result { margin-top: 20px; padding: 15px; background-color: #e0f2f7; border: 1px solid #b0bec5; border-radius: 4px; text-align: center; } .calculator-result h3 { margin-top: 0; color: #00796b; } .calculator-result p { font-size: 1.2em; font-weight: bold; color: #004d40; }

Understanding Machine Hour Rate Calculation

The machine hour rate is a crucial metric in manufacturing and production environments. It represents the total cost incurred to operate a specific machine for one hour. Accurately calculating this rate is essential for pricing products, assessing profitability, making informed decisions about machine utilization, and controlling costs.

The machine hour rate is typically comprised of several components, each contributing to the overall cost of running the machine:

  • Direct Labour Cost per Hour: This includes the wages, benefits, and any other direct labor expenses for the operator specifically assigned to this machine. It's the cost of the human effort directly involved in operating the machine during that hour.
  • Consumables Cost per Hour: This covers the cost of materials and supplies that are consumed during the machine's operation. Examples include lubricants, coolants, cutting fluids, and minor wear-and-tear parts that are replaced frequently.
  • Maintenance Cost per Hour: This accounts for the expenses related to keeping the machine in good working order. It includes routine servicing, repairs, spare parts replacement (for parts that don't depreciate rapidly), and the labor costs associated with maintenance personnel.
  • Depreciation Cost per Hour: Depreciation reflects the reduction in the machine's value over time due to wear and tear, obsolescence, or usage. This cost is typically calculated by dividing the machine's initial cost (minus its salvage value) by its estimated productive life in hours.
  • Overhead Cost per Hour: This is a broader category that includes indirect costs associated with the machine's operation. It can encompass a portion of factory rent, utilities (electricity, water), insurance, supervision, and other factory-related expenses allocated to the machine.

By summing up these individual costs, you arrive at the total cost to run the machine for one hour. This comprehensive rate helps businesses understand the true cost of production and make strategic decisions to improve efficiency and profitability.

Example Calculation:

Let's consider a hypothetical scenario for a CNC milling machine:

  • Direct Labour Cost per Hour: $25.50
  • Consumables Cost per Hour: $5.20 (coolant, minor tooling)
  • Maintenance Cost per Hour: $7.80 (allocated repair budget)
  • Depreciation Cost per Hour: $10.00 (based on machine cost and lifespan)
  • Overhead Cost per Hour: $15.00 (allocated factory costs)

Using the calculator with these figures:

Machine Hour Rate = $25.50 + $5.20 + $7.80 + $10.00 + $15.00 = $63.50

Therefore, the machine hour rate for this CNC milling machine is $63.50 per hour. This value would then be used in further costings and profitability analyses.

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