“Machinery costs are substantial and controlling them is important,” says Bill Lazarus, economist with the University of Minnesota. Lazarus and Roger Selley, University of Nebraska, co-authored the publication.
“Custom charges are often based on these costs. No one should do custom work unless the charge will cover operating costs and use-related depreciation plus as return for one’s risk and time,” Lazarus and Seeley say in the publication.
Farmers incur user-related costs only when a machine is used. Those costs include fuel, lubrication, use-related repairs and labor. Time-related costs, also often referred to as overhead costs, accrue to the owner whether or not a machine is used. Overhead includes the time-related economic costs of interest, insurance, personal property taxes and housing.
To find the publication, visit http://www.apec.umn.edu/faculty/wlazarus/machinery.html. Check with a Minnesota Extension office if you don’t have Internet access.
