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Q: How do you calculate machine cost per hour?
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How do you calculate employer costs for employee compensation per hour worked?

Total comp cost = wage per hour + benefit and pension cost per hour + employer Social Security cost per hour + unemployment tax per hour + worker comp tax per hour.


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The machine hour rate is calculated on the total investment made to run the machine. This includes the cost of accessories, tools , fixtures,inspection equipments etc. First the interest, installment for repayment of loan and depriciation is calculated and it is worked out to per working hour cost. After this variable cost is worked out that is direct and indirect labour cost, consumable cost, power,maintainance,space cost of machine and inventory, interest on appropriate working capital employed, etc. this again worked out to per working hour. Then general costs are applied such as overheads, general admn. cost, waste and scrap and profit. The work hours can be calculated and appropriate efficiency can be applied. N.B.Sawant


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The contribution per machine hour is the contribution per unit divided by the number of machine hours per unit.


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Calculate the machine hour rate from the following: Rs. Rs. Cost of machine 8,000 Shop supervisor salary 200p.m Cost of installation 2,000 Insurance premium for amachine 60 p.a Scrap value after 10 years 2,000 Estimated repair 100p.a Rent and rates for sho 100 p.m Power 2 units per hour @Rs. 5 per 100 units. General lighting 20p.m Estimated working hours 2,000 p.a


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