This document discusses the importance of calculating machine costs for CNC machining operations. It outlines the key fixed and variable costs to consider, including interest, depreciation, taxes, insurance, repairs, maintenance and energy. It recommends using methods like straight-line, diminishing balance or geometrically adjusted diminishing balance depreciation to accurately reflect the asset value over its lifetime. The conclusion emphasizes that operation costs depend mainly on machine run hours, workpiece complexity and raw material costs. Planning is important to set competitive prices and payments for the business.

1. Cost calculation of cnc
machining operation
By
12dm01, Abdul Subhan
12dm02, Abdulkader

2. Machine cost
• When planning we need: –An accurate method of calculating the
cost of owning machinery. •The comparative cost of different
machine combinations. •The comparative cost of getting the work
done through means that do not include ownership
• –To know the effective work we are getting from machinery. •The
ability to calculate costs per hour.
• What are the timeliness costs from not being able to get the job
done and what are the risks of overcapacity.

3. Cost components
Fixed cost:
1, Interest on capital.
2, Depreciation.
3, Tax insurance.
Variable cost:
1, Repair and maintenance.
2, Energy.
• Fixed: because they are fixed regardless of the level of use.
• Variable: Because they vary with the level of use.

4. Importance of planning
• When buying machinery, planning is important in order to be able
to fix payments to the business.
• Most companies will use individual contracts but bulk purchase
can be advantageous.
• There will be more competition in the market. So we should price
competitively.
• To fix a price we should know well about the market and set a
brand value.

5. Depreciation
Reasons:
• Reduction in machine performance due to worn parts.
• Increase in cost for the same unit of output, due to increase in
power consumption, labour or repair cost.

6. Cost calculation
• Straight Line: fixed amount depreciated every year. Simple if
considering having the asset for a longer period.
• Fixed Percentage (diminishing balance): More accurately reflects
the value of the asset throughout its life. Useful when looking at
ownership alternatives.
• Geometrically Adjusted Diminishing Balance: The most accurate,
reflects the initial drop in value of the asset.

7. Variable costs
• Repair and Maintenance costs can be highly variable and
unpredictable for individual machines.
• As machines get older then clearly they are likely to need more
repairs.
• Standard methods use the results from surveys to calculate
estimated repair and maintenance.
• The more complex the machine the more likely it is that costs
will increase as the machine gets older.
• The most common way to express it is as a cumulative cost
through the life of the machine.

8. Types of calculation

9. conclusion
• The cost of operation is mainly based on the no of hours the
machine has running.
• The second major factor Is the complexicity of the work piece.
• And the other factor is the cost of raw material and some time it
may be supplied by the consumer due to the type of material he
needs.

10. Thank you……