Machinery Cost Calculator

Formula

The formula to calculate the machinery cost per hour is:

\[ \text{MC} = \frac{\text{P} - \text{SV}}{\text{LS}} \]

Where:

$\text{MC}$ is the machinery cost per hour (\$/hr)
$\text{P}$ is the total purchase price (\$)
$\text{SV}$ is the eventual salvage value (\$)
$\text{LS}$ is the useful life span (hrs)

What is Machinery Cost Per Hour?

Machinery cost per hour refers to the cost of using a piece of machinery for one hour. It is calculated by subtracting the eventual salvage value from the purchase price and then dividing by the useful life span of the machinery. This metric is important for budgeting and cost management in industries that rely on heavy machinery.

Example Calculation 1

Let's assume the following values:

Total Purchase Price (P) = $100,000
Eventual Salvage Value (SV) = $10,000
Useful Life Span (LS) = 10,000 hrs

Using the formula:

\[ \text{MC} = \frac{100000 - 10000}{10000} = 9 \text{ \$/hr} \]

The Machinery Cost Per Hour is $9/hr.

Example Calculation 2

Let's assume the following values:

Total Purchase Price (P) = $200,000
Eventual Salvage Value (SV) = $20,000
Useful Life Span (LS) = 20,000 hrs

Using the formula:

\[ \text{MC} = \frac{200000 - 20000}{20000} = 9 \text{ \$/hr} \]

The Machinery Cost Per Hour is $9/hr.