Enter the total purchase price ($), the eventual salvage value ($), and the useful life span (hrs) into the Machinery Cost Per Hour Calculator. In Basic (Depreciation Only) mode, the calculator evaluates and displays the straight-line depreciation cost per hour. For a more complete estimate (ownership + operating + optional markup), use the Ownership + Operating Rate tab.
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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 ($)
- LS is the useful life span (hrs)
To calculate the straight-line depreciation cost per hour, subtract the eventual salvage value from the purchase price, then divide by the useful life span.
How to Calculate Machinery Depreciation Cost Per Hour?
The following example problems outline how to calculate straight-line depreciation cost per hour.
Example Problem #1
- First, determine the total purchase price ($). The total purchase price ($) is given as 4,000 .
- Next, determine the eventual salvage value ($). The eventual salvage value ($) is calculated as 1,000 .
- Next, determine the useful life span (hrs). The useful life span (hrs) is found to be 1500.
- Finally, calculate the depreciation cost per hour using the formula above:
MC = (P – SV) / LS
Inserting the values from above yields:
MC = (4000 – 1000) / 1500 = 2.00 ($/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)
