DETERMINING CUSTOM HARVEST CHARGES

Jim Faust

The custom machine hire worksheet is a simple, hand calculated method to aid in estimating machinery use costs. The estimates are calculated by multiplying factors that represent an average farming situation associated with a specific machine by the purchase price of the machine. The worksheet calculates the two types of costs associated with equipment ownership, overhead costs and operating costs. Those who own or have access to a computer may wish to obtain a more indepth Excel Worksheet titled "ownvscust" developed by Gary Frank, UW-Extension. The worksheet is downloadable from http://www.wisc.edu/dairy-profit/.

Custom Rate Worksheet

COMPUTING DIRECT COSTS OF OPERATING POWER AND IMPLEMENTS

(+ Estimated return for management, overhead and risk)

Jim Faust, UWEX-Dunn Co

Power Unit

(tractor or self-

propelled unit) Implement Total

1. Machine...................................................................................................... _____________ _____________

2. Size............................................................................................................. _____________ _____________

3. Purchase price......................................................................................... $____________ $____________

4. Ownership and repair cost (see Table A)........................................... _____________ _____________

5. Hourly ownership and repair cost (3 x 4)............................................. $____________ $____________

6. Fuel and lubrication, cost per hour^a ..................................................... $____________ $____________

7. Total power and implement, cost per hour ( 5+ 6)............................ $____________ + $____________ = $____________

8. Labor cost per machine-hour on the job^b ........................................................................................................................... $____________

9. Total costs per machine-hour on the job for operation (7 + 8)........................................................................................ $____________

10. Units of work per machine-hour on the job (acres, bushels, tons, bales)^c ................................................................. ..____________

11. Total cost per unit of work (9 ¸ 10)........................................................................................................................................ $____________

10% rate 25% rate

12. Adjustment for risk, time for moving from job, other overhead,

and profit margin [line 11 x (10 to 25%)]...................................................................................... $____________ $____________

13. Estimated machine hire rate per unit of operation.................................................................... $____________ $____________

^a ______________ PTO HP	x	.069 for gasoline .0504 for diesel .0823 for LP gas	x	.75 for light load 1.00 for average load 1.25 for heavy load	x	$_________________ Price per gallon			=	$________________ Fuel cost per hour
^b $_________________ wage rate	x	__________________ No. of workers	x	1.05 for tillage operations 1.10 for harvesting operations 1.20 for planting, spraying			=	$____________________________ Labor cost per machine hour
^c __________________ Width in inches	x	__________________ m.p.h. speed	x	_________________ Field efficiency	x	.01	=	_________________ Acres per hour

Table A. Amount of Assumed Use, Assumed Ownership and Repair Costs Per Hour, Per Dollar of the List Price and Rates of Performance Coefficients to be Used in Estimating Costs of Operating Power and Implements

		Years of use (assumed)	Annual hours Of use (assumed)	Cost of ownership And repair per hour, per dollar of list price	Speed (MPH)	Field-efficiency coefficient
Tractor . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic combine . . . . . . . . . . . . . . . . . . . . . Corn head . . . . . . . . . . . . . . . . . . . . . . . . Grain head . . . . . . . . . . . . . . . . . . . . . . . . Tillage implements. . . . . . . . . . . . . . . . . . Rotary hoe. . . . . . . . . . . . . . . . . . . . . . . . Row cultivator. . . . . . . . . . . . . . . . . . . . . . Planter and grain drill. . . . . . . . . . . . . . . . Fertilizer equipment. . . . . . . . . . . . . . . . . Spraying equipment. . . . . . . . . . . . . . . . . Mower . . . . . . . . . . . . . . . . . . . . . . . . . . . Mower conditioner, hay rake . . . . . . . . . . Forage harvester, blower. . . . . . . . . . . . . Hay baler, forage wagon . . . . . . . . . . . . . Grain wagon. . . . . . . . . . . . . . . . . . . . . . . Manure spread . . . . . . . . . . . . . . . . . . . . Liquid manure spreader. . . . . . . . . . . . . .		10 5 5 5 10 10 10 8 8 8 10 10 10 10 10 10 10	400 250 150 100 100 100 100 75 75 75 100 100 100 100 100 100 100	.0004 .0010 .0016 .0023 .0016 .0016 .0016 .0026 .0027 .0023 .0018 .0016 .0016 .0015 .0014 .0015 .0016	… . . . . 3.0 3.0 5.0 9.0 4.0 5.0 5.0 5.0 5.0 5.0 3.0 4.0 . . . 5.0 . . .		. . . . . . .70 .70 .80 .85 .75 .60 .70 .60 60 .80 .70 .75 . . . .70 . . .
NOTE:	Costs were based on 5, 8, or 10 years of depreciated life, an interest rate of 12 percent, insurance at ½ percent, and housing at 1 ½ percent of the remaining value of the beginning of the year. The purchase price was assumed to be 90 percent of the manufacturer’s list price, plus freight and dealer’s setup cost.

Updated 11/98