Contract Manufacturing, Job Shop Quoting & Make-to-Order worked example

Machine Hour Rate at 60% machine utilization factor: a worked example in contract manufacturing, job shop quoting & make-to-order

This worked example runs the machine hour rate numbers for a tougher week than the baseline: 60% machine utilization factor instead of the typical 84%. Calculate machine-hour rate for a job-shop work center or equipment group.

The inputs for this scenario

  • Recoverable machine cost pool (annual): 96,000 $ (held at the documented default)
  • Billable machine hours (annual): 780 machine hr (held at the documented default)
  • Machine utilization factor: 60 % (the input this scenario stresses; the baseline uses 84)

Working through the calculation

  • The calculation starts from the formula this tool documents: base machine-hour rate = recoverable machine cost pool รท billable machine hours.
  • effective machine-hour rate after utilization works out to 73.85 $ / machine hr at these inputs, and this is the headline figure for the scenario.
  • Raw throughput works out to 123 $ / machine hr at these inputs.
  • machine utilization factor works out to 60 % at these inputs.
  • billable machine hours works out to 780 hr at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where machine utilization factor sits at 84% and the headline result is 103 $ / machine hr, this scenario comes in 28.57% below the baseline at 73.85 $ / machine hr.
  • Use it when setting or refreshing the standard rate for a workcenter, building a new machine into your rate card, or sanity-checking why a quote isn't recovering its asset costs. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • effective machine-hour rate after utilization: 73.85 $ / machine hr (headline result)
  • Raw throughput: 123 $ / machine hr
  • machine utilization factor: 60 %
  • billable machine hours: 780 hr

Run it with your numbers

  • To rerun this with your own numbers, open the live Machine Hour Rate calculator, set machine utilization factor to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.