Manufacturing Project Portfolio & Capex worked example

Capital Equipment Depreciation at 98% production allocation share: a worked example

Push production allocation share up to 98% and the picture changes. This example computes every intermediate figure at that operating point. A plant controller allocating machine depreciation to a product line to confirm the capex burden is recovered in the standard cost.

The inputs for this scenario

  • Depreciable asset count: 6 machines (unchanged)
  • Annual depreciation per machine: 42,000 $/machine-yr (unchanged)
  • Production allocation share: 98 % (raised for this scenario; the documented default is 85)
  • Asset disposal and removal cost: 15,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Allocated depreciation = machines x annual charge per machine x allocation% + disposal adder) to the inputs above produces each figure below.
  • At this operating point the engine returns 261,960 $ for total capital equipment depreciation cost, the number this scenario is built around.
  • At this operating point the engine returns 43,660 $ / piece for capital equipment depreciation cost per unit.
  • At this operating point the engine returns 246,960 $ for variable capital equipment depreciation cost.
  • At this operating point the engine returns 15,000 $ for fixed capital equipment depreciation adder.

How this compares with the baseline

  • Against the tool's baseline example, where production allocation share sits at 85% and the headline result is 229,200 $, this scenario comes in 14.29% above the baseline at 261,960 $.
  • Computes total production-allocated capital equipment depreciation by multiplying machine count by the annual per-machine charge times the allocation share, then adding disposal and removal cost. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Total capital equipment depreciation cost: 261,960 $ (headline result)
  • Capital equipment depreciation cost per unit: 43,660 $ / piece
  • Variable capital equipment depreciation cost: 246,960 $
  • Fixed capital equipment depreciation adder: 15,000 $

Run it with your numbers

  • Every input above is editable in the live Capital Equipment Depreciation calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.