# MARC Costing

You can use MARC Costing to calculate the average rate for an equipment based cost (eg. maintenance) which depends on the age (cumulative hours used) of the equipment.

To do this you'll need to setup a special matrix to supply the variable rate based on the age of the equipment.

Here we've defined a Maintenance Rate Matrix specifying seven different hourly rates for different age brackets. For the first 1000 hours the equipment rate will be $45, then for each 1000 hours the rate increases by $5 per hour. Once the age is over 6000 hours the rate will be $100 per hour.

We've also setup the equipment rates with two forklifts that need to provide 5000 hours of work between them.

Using the Inputs above for a capital expense we'll also apply the Maintenance Rate as the MARC Matrix. Previewing the capital expense will show the following outputs including the Averaged MARC rate for both forklifts. Under the Equiptment heading you'll also see the cumulative hours (ages) for the two forklifts and when they're replaced to maintain availability.

To calculate the average rate MARC costing calculates how many hours the equipment operated at each age bracket.

The forklift **New 1** was new at the start of the first period and had been used for 2500 hours at the end of the period. Breaking that down for each age bracket gives us the following:

Hours (hrs) | Rate ($/hr) | Bracket |

1000 | 45 | 0-1000 |

1000 | 50 | 1001-2000 |

500 | 55 | 2001-3000 |

With this rates and hours we can then calculate the average rate.

((Hours 1 * Rate 1) + (Hours 2 * Rate 2) + (Hours 3 * Rate 3) ) / Total Hours = Average Rate

((1000 * 45) + (1000 * 50) + (500 * 55)) / 2500 = 49

MARC costing also takes into account the equipment starting age so if multiple pieces of equipment are used, then an accurate average for all equipment in the period is calculated.

Last updated