Machine Hour Rate Calculator
Work out what one hour on a machine costs to run.
What this calculator does
Machine-related costs pooled and divided by running hours, with running and ownership costs shown separately.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Depreciation for the period (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Power and fuel (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Maintenance and spares (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Tooling and consumables (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Floor space and insurance (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Other machine cost (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Machine hours in the period
- — The hours the machine actually runs, not the hours it is available..
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Machine hour rate = Total machine cost for the period ÷ Machine hours in the period
Worked example
A machine costing its own share of the factory
Everything the machine costs for the period, divided by the hours it runs.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: Rice University — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
Everything the machine costs for a period divided by the hours it actually runs.
The question it answers: What does the material, the labour, the overhead and an hour on the machine cost us?
The formula
Machine hour rate = Total machine cost for the period ÷ Machine hours in the period
- D — Depreciation
- (currency). Optional component.
- P — Power and fuel
- (currency). Optional component.
- M — Maintenance and spares
- (currency). Optional component.
- C — Tooling and consumables
- (currency). Optional component.
- S — Floor space and insurance
- (currency). Optional component.
- O — Other machine cost
- (currency). Optional component.
- h — Machine hours
- (hour). Hours the machine runs in the period.
Units: Currency; hours.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
Machine-related costs pooled and divided by running hours, with running and ownership costs shown separately.
Assumptions built into the result
- Industry: Every cost, rate and standard is the figure the user entered, in the currency they chose; no exchange rate is applied.
- Mathematical: Costs and output cover the same period or the same job.
Figures this calculator will never guess for you
- No industry average, benchmark or target cost is supplied.
- No standard rate, wage or material price is assumed on the user's behalf.
- Optional components are excluded from the result when left at zero.
Limitations
- Arithmetic over the figures entered — it cannot tell whether the costs, standards or allowances behind them are right.
- A target cost, an industry benchmark and the organisation's own standard are different things; only the figures entered are used.
- Running hours, not available hours: idle time raises the rate, which is the intended behaviour.
Source and version
- Standard or reference
- Managerial accounting — job order and process costing — OpenStax (Rice University) (Principles of Accounting, Volume 2: Managerial Accounting (OpenStax) — job cost is direct materials plus direct labour plus overhead applied at a predetermined rate; unit cost is total production cost divided by the units produced.)
- Published source
- Rice University — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
Related tools
Work out the hourly rate to charge a client so that target margin is met after overhead and non-billable time.
Find the true hourly cost of an employee once benefits, payroll cost and overhead are included.
Size a software application from its data and transaction functions before estimating effort or cost.
Estimate development effort, schedule and average team size for a software project of a known size.
Express cloud spend as a cost per customer, per transaction or per other business unit.
Set the rate used to apply manufacturing overhead to jobs for the coming period.