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determining costs of a machine?

Started by karl, February 11, 2008, 07:30:08 PM

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karl

We are considering adding machinery to our milling/drying/planing endevor and need to determine payback time, operation costs, increases in production, how production impacts other operations, and no doubt stuff we haven't even thought of yet.

I've tried to set up a sheet with Excell to estimate costs/production, but can't seem to envision how to organize it so that I can easily convert time, costs, production increase, etc into dollars earned/spent.

Can someone point us in the right direction?

"I ask for wisdom and strength, Not to be superior to my brothers, but to be able to fight my greatest enemy, myself"  - from Ojibwa Prayer.

oldsaw

It's best to break it into pieces.  You are going to have machine "X" which is going to cost say $5000.  You expect the machine to have a life of 10 years, so your machine cost is going to be $500/yr (I'm going to skip tax implications here to keep it easy).  Now, you will have to figure out how much you will run the machine, how much power it will consume per hour or bdft, maintenence costs per hour or thousand bft, how much time to process per bdft, labor costs, rebuild costs if applicable. 

If you want a planer, you will have blades that will be resharpenable so many times, but need to be replaced after so many sharpenings.  So, if a set of blades costs $100, costs $25 to sharpen, and can be sharpened 4 times before they need to be replaced, you have figured out one leg of the problem.  If you can run the planer for 10 hours on a sharpening, $200 will give you 50 hours of run time ($100 + $25 four times) which equals $40 per hour of operation.  If the electricity runs another $5 per hour, you are up to $45 per hour.  The actual machine will cost you pennies per hour, but you will need to estimate up for unexpected items, but not go overboard.  So, estimate that and downtime for repairs and maintenence into the mix (especially if you are hiring help) and you will soon find it costs you say $47/hr to operate the machine, plus labor.  If you can process 100bft of lumber per hour, it will cost 47 cents per bdft to operate, so you will need to get more than that to be profitable.

I just made up numbers, but it should give you an idea.

Mark
So many trees, so little money, even less time.

Stihl 066, Husky 262, Husky 350 (warmed over), Homelite Super XL, Homelite 150A

MartyParsons

The Wood-Mizer web site has a program that you can down load. It gives you data for a Wood-Mizer operation. But you could use the same form for other equipment just change the #. If you can not find it let me know. I can send you a hard copy just get me you shipping address.
Marty
"A pessimist sees difficulty in every opportunity; an optimist sees opportunity in every difficulty." -Winston Churchill

karl

Thanks,
once I saw the woodmizer profitability sheet the light came on :-[- profit and loss sheet ::).
Sometimes I just like to make things harder than they are.. ;)

20 minutes and we are good to go, set it up so that we can play with time and costs and see effects immediately.
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"I ask for wisdom and strength, Not to be superior to my brothers, but to be able to fight my greatest enemy, myself"  - from Ojibwa Prayer.

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