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Hourly cost: FOUR FACTORS

Four other factors must be added together to calculate the hourly cost of a machine

Labour

The first cost factor is the labour connected with the machine. When the machine needs continuous supervision, the cost of an operator dedicated to the machine must be taken into account (from 20 to 25,000 euro a year to be divided by 1800 hours per year).

Maintenance costs

The second factor is the annual maintenance costs, which include the expendable materials, the hydraulic oil and the lubricants, the cost of technical assistance and spare parts.
The cost of maintenance incurred for the machine in one year, divided by 1800 hours per year, gives this value.

Cost of the electricity

The third factor is the cost of the electricity consumed by the plant each hour. Lacking data regarding plant absorption of electricity, a prudent calculation could be half the installed power.

Cost of amortization of the machine

The fourth factor is the cost of amortization of the machine. To calculate this hourly cost it is sufficient to divide the envisaged amortization rate for the machine during the year in progress and once again divide it by 1800 hours per year.
If the machine has been purchased by leasing, the annual instalment divided by 1800 hours may be considered instead of the cost of amortization. In this way, upon completion of machine amortization or upon expiry of the leasing contract, there will be a reduction in the hourly cost of the machine.



"Punching and stamping: how to compare production cost."
Article taken from "Lamiera" Magazine: October 2005