Manufacturing Cost Accounting & Finance worked example

Cost Center Rate at 61% productive time ratio: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop productive time ratio to 61%, then walk the calculation through step by step. Estimates the total cost and effective hourly rate of a cost center from run hours, an hourly cost, and a productive-time ratio.

The inputs for this scenario

  • Productive Hours in Period: 1,600 hours (held at the documented default)
  • Cost per Hour: 55 $/hr (held at the documented default)
  • Productive Time Ratio: 61 % (the input this scenario stresses; the baseline uses 85)
  • Fixed Period Cost: 8,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Total cost center cost = hours x cost per hour x productive ratio% + fixed period cost.
  • Total cost center rate cost works out to 61,680 $ at these inputs, and this is the headline figure for the scenario.
  • Cost center rate cost per unit works out to 38.55 $ / piece at these inputs.
  • Variable cost center rate cost works out to 53,680 $ at these inputs.
  • Fixed cost center rate adder works out to 8,000 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where productive time ratio sits at 85% and the headline result is 82,800 $, this scenario comes in 25.51% below the baseline at 61,680 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to productive time ratio, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It blends all cost into one hourly figure; departments running very different machines or skill levels may need separate sub-rates to avoid averaging away real cost differences.

Results at a glance

  • Total cost center rate cost: 61,680 $ (headline result)
  • Cost center rate cost per unit: 38.55 $ / piece
  • Variable cost center rate cost: 53,680 $
  • Fixed cost center rate adder: 8,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Cost Center Rate calculator, set productive time ratio to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.