Actual Costs and Machine Performance

摘要

Last month, we introduced the total cost diagram as a simple, easy-to-use graphic to define age zones based on the time in the life of a machine when the average cost per hour, life to date, reaches a minimum. This month, we will show how the diagram can track the costs of a machine or group of machines and assist in making replacement and/or rebuild decisions. First, a brief recap. In the nearby diagram, the horizontal axis measures total hours worked, life to date in thousands, and the vertical axis measures total dollar expenditures on the machine, life to date in thousands. The vertical red dotted line from A to B represents the $100,000 purchase price of our example machine. The upward curving dotted red line from B on represents the estimated total expenditure on repair parts and labor and other age-dependent costs incurred as the example machine works and accumulates hours along the horizontal axis. The slope of the green line that starts at A and touches the dotted red line at C represents the minimum cost-recovery rate for the machine. By the time this machine is 16,000 hours old (point C), it will have cost $200,000: $100,000 to buy it (A to B) and $100,000 to repair and maintain it as it ages from zero to 16,000 hours (B to C). These costs are recovered at a uniform rate of $12.50 per hour ($200,000 divided by 16,000 hours) as shown by the slope of the green line.