Estimate machinery ownership, depreciation, interest, fuel, repairs, labor, hourly cost, cost per acre or hectare, and the utilization needed for a target rate. The examples below use the separate Depreciation per lifetime hour mode; that answer excludes interest and operating costs.

USD estimate using straight-line depreciation and average-value interest. This is not a loan payment, tax depreciation or capital-recovery calculation.

Include all paid and unpaid labor attributed to one machine-hour.

Machinery Depreciation Cost Per Hour Formula (Straight-Line)

The following formula is used to calculate the straight-line depreciation cost per hour (a component of total machinery cost per hour). 

MC = (P - SV) / LS
  • Where MC is the straight-line depreciation cost per hour ($/hr)
  • P is the total purchase price ($) 
  • SV is the eventual salvage value ($) 
  • LS is the useful life span (hrs) 

To calculate the straight-line depreciation cost per hour, subtract the eventual salvage value from the purchase price, then divide by the useful life span.

How to Calculate Machinery Depreciation Cost Per Hour?

The following example problems outline how to calculate straight-line depreciation cost per hour.

Example Problem #1

  1. First, determine the total purchase price ($). The total purchase price ($) is given as 4,000.
  2. Next, determine the eventual salvage value ($). The eventual salvage value ($) is calculated as  1,000.
  3. Next, determine the useful life span (hrs). The useful life span (hrs) is found to be 1500.
  4. Finally, calculate the depreciation cost per hour using the formula above: 

MC = (P – SV) / LS

Inserting the values from above yields: 

MC = (4000 – 1000) / 1500 = 2.00 ($/hr)

Example Problem #2

The variables needed for this problem are provided below:

total purchase price ($) = 60,000

eventual salvage value ($) = 10,000

useful life span (hrs) = 2000

Entering these values and solving gives:

MC = (P – SV) / LS = 25.00 ($/hr)