MIRDC Machine Rates and Heat Treatment Services

I. Definition of Terms

A. Machine Rate - the hourly cost, expressed as PhP/hour, of using a machine.

B. Time Sharing - the hourly cost, expressed as PhP/hour, of using a machine wherein the
customer provides the machine operator

C. Actual Time - the hourly cost, expressed as PhP/hour, of using a machine wherein
MIRDC personnel acts as machine operator

D. Acquisition Cost – the actual cost of acquiring a machine, including installation and
commissioning.

E. Assessment Value Factor– an attribute of the value of the machine based on its age.
For machine age less than 10 years old = 1.0
For machine age 10 years old and above = 0.10. This will provide an equivalent to a
salvage value of 10% of the acquisition cost of the machine after 10 years.

F. Maintenance Factor – an attribute of the maintenance requirements of the machine based

on its age.
For machine age of less than 10 years = 0.02. This equates to 2% of the acquisition cost
of the machine
For machine age of 10 years and above = 0.10. This is equivalent to 10% of the salvage
value of the machine after 10 years.

G. Useful years – an estimate of the average number of years the machine is useable.
For new machines, the useful life is estimated at 10 years
For machine age 10 years old and above, the useful life is estimated to be extended for
five (5) more years.

H. Work hours in a year – the number of hours each personnel works in a year = 1,980. (12
months per year x 22 days per month x 7.5 hours per day)

I. Labor hourly rate – The annual basic compensation of personnel directly involved in
operating the machine divided by 1,980 work hours per year.
 J. Annual basic compensation – basic monthly salary (4th tranche) x 12 months + 13th and
14th month pay + PERA + RATA + Annual Cash Gift + Uniform Allowance.

K. Heat Treatment Service – a batch process of making ferrous metals harder or softer
wherein the cost is expressed as PhP/batch.

II. Computation Formula

A. Time Sharing = Depreciation cost/hour + Maintenance cost/hour + Tools and Supplies

cost/hour + Utilities cost/hour

C. Actual Time = Depreciation cost/hour + Maintenance cost/hour + Tools and Supplies

cost/hour + Utilities cost/hour + Labor hourly rate

III. Basis of Computation

A. Personal Services (PS)

The rates for PS shall be computed based on the man hours spent for the activity and
hourly rates.

B. Maintenance and Other Operating Expenses (MOOE)

This component is computed as follows:

MOOE =Supplies and Materials + Utilities + Equipment Maintenance, Calibration and

Depreciation

 Tools and Supplies = Actual cost of tools and supplies usage per hour

 Utilities = Water + Electricity (cost per hour)

Water = consumption per hour x PhP60/cu.m.

Electricity = Wattage of Machine x Power Consumption Factor x Electricity price per hour

Power Consumption Factor is the average power consumed by a machine:

Without temperature controller = 1.0/hour

With temperature controller = 0.3/hour at 60-100 C

With temperature controller = 0.5/hour at ≈ 650 C

With temperature controller = 0.75/hour at > 800 C

 The cost of electricity per hour of the lighting and airconditioning of the machine is
included in the computation.

Electricity Price per hour of each machine is dependent to the Demand Charge of the
building they are installed:

Foundry bldg. = PhP38.00/kwH

Machine Shop bldg. = PhP12.10/kwH
Welding and Fabrication bldg. = PhP12.75/kwH
Surface Engineering bldg. = PhP23.00/kwH

 Equipment Cost per hour = Maintenance Cost + Depreciation Cost + Calibration Cost

Acquisition Cost x Assessment Value Factor x Maintenance Factor

 Maintenance Cost/hour =
Work Hours in a Year

Acquisition Cost x Assessment Value Factor

 Depreciation Cost/hour =
Useful Years x Work Hours in a Year

Paid Calibration Fee

 Calibration Cost/hour =
Work Hours in a Year x Calibration Interval (in years)

IV. Heat Treatment Services

Ramping of furnace during tempering, hardening, annealing or normalizing.

1020 C soak
temperature

800-900 C soak Vacuum

hardening/
annealing/
normalizing
soak Conventional
600-650 C
hardening/annealing/
normalizing

tempering

0.5 hr 1.0-2.5 hrs 0.50 hr 1.0-1.25 hrs 1.25 hrs

0.50 hr

time