Machine Hourly Production Cost

Finding an hourly cost

Divide annual fixed costs by expected productive hours. Add hourly energy, labour and consumable costs to that allocation. This tool does not choose a depreciation method. Include the annual amount accepted by your business in fixed costs.

Example and scope

Fixed costs of 120000 over 2000 productive hours allocate 60 per hour. Adding energy of 20, labour of 40 and consumables of 10 gives a total hourly cost of 130. These are example amounts only. Profit, tax and financing are not added automatically. Recording maintenance in both annual costs and hourly consumables would double count it. Check the final budget against actual business records.

Track fixed allocation as production hours change

Take annual fixed cost 60000, production time 1500 hours and hourly energy, labour and consumables costs of 12, 25 and 3 currency units. Fixed allocation is 60000 / 1500 = 40 per hour. Variable costs total 12 + 25 + 3 = 40, so hourly cost is 80. Annual total is 60000 + 1500 × 40 = 120000. These amounts are examples, not wage or tariff recommendations.

If the same fixed cost is spread across only 1000 production hours, fixed allocation becomes 60 and hourly total becomes 100. The higher hourly cost at lower production follows from this allocation. Annual total does not remain unchanged because variable costs depend on production hours.

Production time is not every calendar hour when the machine exists. Define where maintenance, setup and idle costs are included. Do not enter a power rating as hourly energy cost. Enter consumption multiplied by its price. Avoid adding labour again if another cost item already covers it. Turning machine hourly cost into a selling rate requires separate consideration of profit and commercial terms.

Frequently asked questions

How do you calculate variable cost per machine hour?

With example hourly energy cost 25, labour cost 40 and consumables cost 15, variable machine cost is 80.00 currency units per hour. This preliminary estimate sums only expenses assumed to vary with operating time, setting fixed costs to zero and excluding tax, profit, financing and costs unrelated to operating hours.

Calculate with these values