Measure the hours that recover the machine’s cost

Choose a definition that matches the rate

This tool measures billed utilization, not overall equipment effectiveness. A machine can be moving while producing unbilled rework, or stopped during a setup that the customer pays for. Decide whether the rate’s denominator includes billed setup, spindle time or all occupied job time, then use the same basis for both available and sold hours. Enter one period and one machine or cell scope. Adding several machines’ sold hours to one machine’s available hours will produce a misleading result, so the form rejects sold hours above available hours on the selected basis.

Keep fixed and variable costs distinct

The annual fixed amount is the cost that remains under the modeled capacity change, such as ownership, staffed labor and allocated overhead. Variable cost is added for each billed hour. Power or consumables placed in both fields would be recovered twice. When staffing itself changes at another shift, make a new scenario with the corresponding annual cost rather than assuming all costs stay fixed forever. The calculator shows break-even only; no selling markup or target margin is included.

Investigate the reason for unsold time

A low sold-hour result can reflect demand, missing material, program readiness, tool availability, maintenance or time-recording conventions. Raising the hourly rate may improve recovery on work you win but does not resolve each of those causes. Compare planned and actual job hours, and distinguish quoted setup that was recovered in dollars from time actually recorded as billable. At zero sold hours the tool reports that fixed cost is unrecovered instead of displaying an infinite price. Review the underlying schedule and records before treating a utilization target as capacity you can sell.

• Define the annual overhead pool