Machine hour cost is the real cost to the business of one hour of machine time allocated to production. Not only electricity costs; It also includes the labor share allocated to depreciation, maintenance, space, auxiliary operations and machinery. If not calculated correctly, product cost and sales price may remain below reality.
Calculate Your Machine Cost per Hour and per Product
Enter expenses and working hours for the same month. Use amounts excluding VAT and from the same accounting period.
Result; does not include material, waste, subcontracting, quality and packaging expenses.
Machine Hour Cost Formula
Machine hour cost = Total monthly machine expense ÷ Monthly available machine hours
Available hours; It is found by subtracting from the shift calendar the planned maintenance, mold or tool change, cleaning and other periods when the machine is not in production.
Depreciation or rent
Investment cost or monthly financial leasing expense distributed over the economic life of the machine.
Energy and utilities
Electricity, natural gas, compressed air, cooling and other consumptions directly connected to the machine.
Maintenance and consumables
Periodic maintenance, failure, spare parts, tool wear, oil and machine consumables.
Operator cost
If the operator is allocated to a single machine, full share; distribution by work share if managing multiple machines.
Area and common expense share
Machine footprint, insurance, and measurable common expenses allocated to the production department.
Available time
Realistic time dividing the expense. Using high hours without taking into account downtime underestimates the cost.
Sample Machine Hour Cost Calculation
- Depreciation: 60,000 TL
- Energy: 72,000 TL
- Maintenance and consumables: 24,000 TL
- Space and other expenses: 18,000 TL
- Labor allocated to the machine: 50,000 TL
Total monthly expenses: 224,000 TL
176 planned hours – 26 hours maintenance, preparation and scheduled downtime = 150 hours
1.493,33 TL/hour224,000 TRY ÷ 150 hours
Do not use calendar time directly in cost calculation
Although the machine is on site throughout the month, it is not available for production at all hours. Dividing it by 176 hours, without subtracting maintenance, preparation and planned downtime, shows the hourly cost as 1,272.73 TL in the example. Using a realistic 150 hours, the cost is 1,493.33 TL; The difference is approximately 17 percent.
How Machine Cost is Reflected in the Product?
1.493,33 TL
An available hour of the machine.
6 minutes
0.10 machine hours for one product.
149.33 TL
1,493.33 × 6 ÷ 60; for a single intact product in the cycle.
If two solid products come out per cycle, divide this amount by two. Defective parts are not added to the count of solid products. To see the entire direct material, subcontracting, packaging and general production costs, review the product cost calculation guide and review it.
Why Does Hourly Cost Vary Over Months?
Low capacity utilization
When fixed costs such as depreciation and space are divided by fewer production hours, the hourly cost rises. You can evaluate the capacity calculation with production capacity guide Evaluate together.
Unplanned downtime and malfunctions
While unproductive hours decrease, maintenance, labor and delivery risks remain. actual working rate of the machine in machine efficiency article and examine it.
Energy and maintenance prices
Accounting period expenses should be updated as tariff, consumption, tool and spare part costs change.
Product and operation difference
The machine share of products with different cycle, preparation and waste rates on the same machine will not be the same.
When moving machine hour expense to product cost in the production cost calculation guide examine the overhead and unit cost approach; Don't charge the same expense twice.
Frequently Asked Questions
Is the operator fee added to the machine hour cost?
It can be added depending on the cost structure of the product. If the operator is looking after more than one machine, the total employer cost should be distributed according to the labor or service share.
Are unplanned downtime hours deducted from available time?
Actual non-working time is taken into account in the actual cost analysis. In standard cost, normal capacity and planned downtime assumptions should be kept separate.
How often should the machine hour cost be updated?
If energy, labor and maintenance expenses change rapidly, monthly; In more stable structures, it can be reviewed quarterly.
Are standard and actual machine costs the same?
No. Standard cost is based on planned expense and capacity, while actual cost is based on actual expense and labor hours. The difference should also be monitored for management.
Manage machine, operation and product cost in the same process
Examine with Korgün ERP how working time, production quantity, waste and incurred expenses are reflected in product cost.