<p><strong>Correct approach:</strong> there is reliable information (from the vendor and/or from past experience), that the machine can perform $T$ number of tests in total before being scrapped or taken out of service. Then the cost of the machine per se allocated to the execution of one test is $10.000 / T$.</p>

<p>In the OP's case, a straight-line depreciation method is applied, writing-off $2.000$ per year. The problem here in the calculation $2.000/T_i$ for year $i$, is that next year, if the number of tests is more/less, one will get a different cost allocation of the value of the machine on a single test -and it will be misleading. So for economic-costing purposes this is not advised. But for purposes of reconciliation with accounting practice year-by-year, then one could accept the artificial variation, if one cannot apply the correct approach.</p>

<p>A mitigating approach, if historical data exist, is to take "average yearly tests performed", and divide $2.000$ with this average.</p>

CC BY-SA 3.0
2017-08-27T17:18:39.553Z
2017-08-27T17:18:39.553Z
Alecos Papadopoulos
<p>For plain accounting purpose, @bobu5678 is a common practice. </p>

<p>If your intention is to justify something like Return On Investment(ROI), then this can be pretty tricky. </p>

<p>E.g.</p>

<ol>
<li>Maintenance cost, e.g. electricity, replacement parts, cleanup/lubricants.</li>
<li>Should you rent the machine?</li>
<li>The cost of the machine in the 1 year time spend versus outsource the products. Or can you do otherwise, take others people outsource to make full use of the machine.</li>
<li>Upgrade and obsolescent</li>
</ol>

<hr>

<p>You can use conservative formula</p>

<p>(interest rates x purchase cost)/write-off period + 
write off rates + operating cost + maintenance cost) / total usage </p>

<p>Sometime you may need to add up tangible or intangible benefits. </p>

<p>So in business, tools usage costing is not as simple as purchase and divide.  </p>

CC BY-SA 3.0
2017-07-28T09:43:38.460Z
I'm trying to calculate the cost of a diagnostic test. The yearly write-off is 2000 dollars.

Is it just 2000/number of tests done per year?
j1096707mvrhtnet
CC BY-SA 3.0
2017-07-27T09:59:50.417Z
2017-07-28T12:51:39.153Z
2017-07-28T12:51:39.153Z
mootmoot
<p>Accounting guidelines determine how you amortize the cost of the machine, typically straight line over 5 years.  Your cost per usage is a metric that you figure for your own purposes, you're mixing apples and oranges.</p>

CC BY-SA 3.0
2017-07-28T09:43:04.827Z
I'm trying to calculate the cost of a diagnostic test. The yearly write-off is 2000 dollars.

Is it just 2000/number of tests done per year?
j1096707mvrhtnet
CC BY-SA 3.0
2017-07-26T19:55:15.630Z
2017-07-26T19:55:15.630Z
bobu5678
<p>If you buy a machine for 10.000 dollars, which costs as a yearly write-off 2000 dollars, how do I calculate the cost per usage of a machine? Do you just divide the the yearly write-off by the times you use it per year? Or do you divide the yearly write-off by the times you potentially could use it per year? 
How do you take into account the wear and tear/loss of value of using it? 
Or is there some other way?</p>

<p>The machine is used in diagnostic medicine. I'm trying to calculate how much 1 test costs.</p>

<p>Is it just 2000/(Number of times used per year)? </p>

<cost>
How do I calculate the cost per usage of a machine?
j1096707mvrhtnet
# How do I calculate the cost per usage of a machine?

(Asked by: username_0 on 2017-07-26)

If you buy a machine for 10.000 dollars, which costs as a yearly write-off 2000 dollars, how do I calculate the cost per usage of a machine? Do you just divide the the yearly write-off by the times you use it per year? Or do you divide the yearly write-off by the times you potentially could use it per year?
How do you take into account the wear and tear/loss of value of using it?
Or is there some other way?

The machine is used in diagnostic medicine. I'm trying to calculate how much 1 test costs.

Is it just 2000/(Number of times used per year)?

**Tags:** cost

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## 3 answers

### Answer by username_1 on 2017-08-27. Score: 2

**Correct approach:** there is reliable information (from the vendor and/or from past experience), that the machine can perform $T$ number of tests in total before being scrapped or taken out of service. Then the cost of the machine per se allocated to the execution of one test is $10.000 / T$.

In the OP's case, a straight-line depreciation method is applied, writing-off $2.000$ per year. The problem here in the calculation $2.000/T\_i$ for year $i$, is that next year, if the number of tests is more/less, one will get a different cost allocation of the value of the machine on a single test -and it will be misleading. So for economic-costing purposes this is not advised. But for purposes of reconciliation with accounting practice year-by-year, then one could accept the artificial variation, if one cannot apply the correct approach.

A mitigating approach, if historical data exist, is to take "average yearly tests performed", and divide $2.000$ with this average.


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### Answer by username_2 on 2017-07-27. Score: 1

For plain accounting purpose, @bobu5678 is a common practice.

If your intention is to justify something like Return On Investment(ROI), then this can be pretty tricky.

E.g.

1. Maintenance cost, e.g. electricity, replacement parts, cleanup/lubricants.
2. Should you rent the machine?
3. The cost of the machine in the 1 year time spend versus outsource the products. Or can you do otherwise, take others people outsource to make full use of the machine.
4. Upgrade and obsolescent

---

You can use conservative formula

(interest rates x purchase cost)/write-off period +
write off rates + operating cost + maintenance cost) / total usage

Sometime you may need to add up tangible or intangible benefits.

So in business, tools usage costing is not as simple as purchase and divide.

> **Comments:**
> **username_0**: I'm trying to calculate the cost of a diagnostic test. The yearly write-off is 2000 dollars.  Is it just 2000/number of tests done per year?  

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### Answer by username_3 on 2017-07-26. Score: 0

Accounting guidelines determine how you amortize the cost of the machine, typically straight line over 5 years. Your cost per usage is a metric that you figure for your own purposes, you're mixing apples and oranges.

> **Comments:**
> **username_0**: I'm trying to calculate the cost of a diagnostic test. The yearly write-off is 2000 dollars.  Is it just 2000/number of tests done per year?  

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