What are Variable Costs? y o u r k n o w l e d g e p a r t n e r - - PowerPoint PPT Presentation

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What are Variable Costs? y o u r k n o w l e d g e p a r t n e r - - PowerPoint PPT Presentation

Mar 20, 2023 23 likes •176 views

What are Variable Costs? y o u r k n o w l e d g e p a r t n e r These are costs paid only when the machine works Running costs Calculated per hour Components: Fuel Oil and lubricants Repair and maintenance Tyres

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SLIDE 1

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

49

  • These are costs paid only when the

machine works

  • Running costs
  • Calculated per hour
  • Components:

– Fuel – Oil and lubricants – Repair and maintenance – Tyres

What are Variable Costs?

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SLIDE 2

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

50

  • Calculated by:

r 112.44/hou R L/hour 18.74 6.00/litre R (L/hour) n consumptio (R/Litre) cost     

Variable Costs – Fuel Cost

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SLIDE 3

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

51

  • Calculate consumption

L/hour 18.69 0.7 kW 100 0.267 (decimal) factor load (kW) pow er machine L/kWh 0.267       

L/kWh 267 . 1000 g/L 0.96 257g/kWh  

Variable Costs – Calculation of Fuel Costs

A motor at full speed (total performance = 100 %) consumes 257g of diesel/kWh. Diesel has a specific weight of 0.96.

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SLIDE 4

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

52

Type of machine Cost of oil and lubricants

Percentage (%) Decimal Chainsaw 20 % 0.20 Machines without hydraulics 10 % 0.10 Machines with simple hyraulics 15 % 0.15 Machines with extensive hydraulics 20 % 0.20

Variable Costs – Oil & Lubricant

Calculated as a percentage of the fuel cost.

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SLIDE 5

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

53

  • You can also calculate oil and lubricant

consumption per hour (Q) with the formula below

  • GHP: Gross Horse Power of the machine

controls) (hydraulic GHP .0001 Q drives) (final GHP 0.0002 Q

  • il)

ion (transmiss GHP 0.0003 Q

  • il)

(crankcase GHP 0.0006 Q        

Variable Costs – Oil & Lubricant

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SLIDE 6

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

54

  • Cost of keeping a machine running in a safe and

productive manner

  • As the machine gets older repair and

maintenance costs go up Variable Costs – Repair & Maintenance

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SLIDE 7

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

55

Type of Machine Repair and Maintenance cost (r)

Percentage (%) Decimal Tractor 100 % 1.00 Cable skidder 50 % 0.50 Grapple skidder 60 % 0.60 Chainsaw 100 % 1.00 Feller-buncher 50 % 0.50

Variable Costs – Repair & Maintenance

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SLIDE 8

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

56

  • To calculate the repair and maintenance

costs/hour:

– Purchase price (R 1 000 000) – Repair and Maintenance factor (r) (0.8) – Machine life in years (5 years) – PMH worked per year Variable Costs – Repair & Maintenance

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SLIDE 9

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

57

  • Calculate the annual repair and maintenance

cost/hour :

R/hour ar w orked/ye PMH 00/year 160 R 000/year 160 R years 5 0.8 000 000 1 R (years) life Machine (decimal) r (R) price Purchase       

Calculate Repair & Maintenance Costs

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SLIDE 10

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

58

  • Information needed:

– Estimated tyre life in hours (2 000 hours) – Cost per tyre (R 7 500) – Number of tyres – Machine life in hours (10 000 hours) – Machine life in years (5 years)

  • Calculations:

– Number of sets of tyres used – Cost per set of tyres – Total cost for tyres per year/month/day etc.

Variable Costs – Tyres

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SLIDE 11

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

59

  • Number of sets of tyres used
  • Cost per set of tyres
  • Total cost for tyres per year

tyres/year

  • f

set 1 life machine years 5 tyres

  • f

sets 5 tyres

  • f

sets 5 life tyre hours 000 2 life machine hours 000 10     000/set 30 R 500/tyre 7 R tyres/set 4   

000/year 30 R 000/set 30 R tyres/year

  • f

set 1   

Variable Costs – Tyres

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SLIDE 12

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

60

  • Total variable costs/hour =

Fuel costs/hour + Oil and Lubricant costs/hour + Repair and Maintenance costs/hour +Tyre costs/hour

Variable Costs – TOTAL

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SLIDE 13

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

61

Operator Costs

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SLIDE 14

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

62

  • Pay your operator for his work:

– Basic wage – Overtime – Benefits – Paid travelling time

  • Before tax

What are Operator Costs?

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SLIDE 15

y o u r k n o w l e d g e p a r t n e r

Department of Forest and Wood Science

63

  • Total operating costs/hour =

Total Fixed costs/hour + Total Variable costs/hour + Total Operator costs/hour

  • To calculate the total operating cost/m3:

3 3

R/m /hour) (m ty/hour Productivi (R/hour) costs/hour

  • perating

Total  

TOTAL OPERATING COSTS