Machine Hour Rate Calculator

Work out machine hour rate instantly with clear inputs, formula shown and shareable results.

About Machine Hour Rate Calculator

The machine hour rate absorbs all costs of running a machine centre over its productive hours: depreciation, space, insurance and supervision as fixed cost, power, consumables and maintenance as variable, plus the operator. Productive hours must exclude downtime and setup, or the rate will under-recover.

Formula

Machine hour rate

Rate = annual fixed cost / productive hours + annual variable cost / productive hours + operator rate

Worked example

With the default values below, Machine Hour Rate Calculator returns Machine Hour Rate of $506.88. Change any input above and every figure here is recalculated in your browser.

Inputs used

Annual Fixed Costminimum 0: 850,000
Annual Variable Costminimum 0: 420,000
Productive Machine Hours Per Yearminimum 1 hours: 3,200 hours
Operator Costminimum 0 per hour: 110 per hour

Results

Machine Hour Rate: $506.88
Fixed Cost Per Hour: $265.63
Variable Cost Per Hour: $131.25
Annual Cost To Recover: $1,622,000.00

Step by step

1Values used
2Machine hour rate
3Machine Hour Rate= 506.88
4Fixed Cost Per Hour= 265.63
5Variable Cost Per Hour= 131.25
6Annual Cost To Recover= 1,622,000.00

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation or tax into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why does the hours assumption matter so much?

Fixed cost per hour is inversely proportional to hours. Assuming 4000 hours and achieving 2500 leaves 37% of fixed cost unrecovered, which shows up as an unexplained overhead variance.

Should setup time be charged at the same rate?

Yes if the machine is occupied. Setup consumes capacity exactly as production does, which is why setup reduction improves recovery as well as output.