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In the third part of our blog series on machine shop estimating methods, we will delve into Machine-Hour Estimating. This approach is widely used in the industry, as it takes into account the cost of operating machines and equipment during the production process.

In this post, we’ll discuss the basics of Machine-Hour Estimating, its pros and cons, and how it can be implemented in a machine shop.

Machine-Hour Estimating Basics

Machine-Hour Estimating is a method that calculates the cost of a job based on the number of machine hours required for production. It takes into account the cost of operating machines and equipment, which can include factors such as depreciation, maintenance, and energy consumption.

This method is particularly useful for jobs that involve a significant amount of machine time, as it provides a more accurate reflection of the costs involved in the production process.

Implementing Machine-Hour Estimating in a Machine Shop

To implement Machine-Hour Estimating in a machine shop, you will need to gather the following data:

1. Machine costs: Determine the costs associated with operating each machine, including factors such as depreciation, maintenance, and energy consumption.
2. Operation times: Calculate the number of machine hours required for each operation in the production process.
3. Total machine-hour cost: Multiply the machine costs by the operation times to determine the total cost of operating the machines for the job.

Pros and Cons of Machine-Hour Estimating

Pros:

• Accuracy: Machine-Hour Estimating provides a more accurate estimate of the costs involved in operating machines and equipment.
• Cost control: This method allows for better cost control by identifying the most efficient use of machines and equipment.
• Flexibility: Machine-Hour Estimating can be adapted to different types of machines and production processes.

Cons:

• Data requirements: This method requires detailed data on machine costs and operation times, which may not always be readily available.
• Complexity: Machine-Hour Estimating can be more complex than other methods, particularly for jobs that involve multiple machines or processes.

Machine-Hour Estimating is a valuable method for estimating costs in a machine shop, particularly for jobs that involve significant machine time. By accounting for the costs of operating machines and equipment, this method provides a more accurate and comprehensive view of the production process.

In the next part, we will discuss another important estimating method: Cost-Based Estimating.