How To: Cost Trucks
1. Background
The Logger's Edge
allows you set up your truck costing so that you can base trucking costs
for your own trucks using two basic methods:
1.) Costing by Load Ticket. This method
uses the load tickets entered in the
The Logger's Edge
to calculate your internal costs. There are several alternative ways
of using your load tickets to cost your trucks, including by the net weight
hauled, by the distance, or by the net weight multiplied by the trip time (tonne-hour)
2.) Costing by Time Slip. This method
uses the time slips you enter in
The Logger's Edge
to calculate your internal costs. If you enter time tickets for your
trucks and/or truck drivers these slips will be used to calculate the hours
the truck was in operation. Combined with an hourly standard cost,
The Logger's Edge
will compute the internal cost of operating the truck.
In
The Logger's Edge
you will to select one of these two methods to apply to
all your
trucks.
Activate the 'Calculate Cost Based on Weight/Volume Delivered' Flag
This flag tells
The Logger's Edge
to use your load slips when costing trucks.
Set up Truck Costs
From the main menu go to Setup | Equipment / Trucks | Trucks | Truck Costing
For each of your trucks, enter your rates and the basis (unit of measure)
There are 2 rates you can use in the system:
(1) The Standard Cost/Unit. This rate is the cost
of operating your truck for comprising all costs, with the exception of the
driver's cost. This is sometimes referred to as the 'Dry' rate.
(2) The Full Cost/Unit. This is the is the cost
of operating your truck for comprising all costs, including the cost
of the driver. This is sometimes referred to as the 'Fully Founded' or
'All Found' rate.
The cost basis determines the units that are used in the calculation.
For example, if you choose tonne, the rates will be applied to the net
tonnes hauled (i.e. $2.00/Tonne). You could also choose a volume
measure, such as cubic meters, MBF or Cords for costing. If you use a
volume measure, you should make sure that the volume is entered directly on
your load tickets or that you have a conversion rate set up to convert your
weights to volumes.
If you want to use a Tonne-Hr or Ton-Hr basis for costing your trucks
there is document addressing that specific scenario here:
How to: Truck Cost by Tonne-Hr.
In the
The Logger's Edge
there is a truck costing worksheet that can be used to build up your
standard and full found costs. See
Truck Cost Worksheet for more detail on this feature.
Special Considerations for Costing by Distance
In the unit of measure list there are a special item called 'DIST' and it
refers to costing by distance.
In order to use either of these special items, they must first be
activated:
In order to activate the DIST item, you must be logged in as an
administrator.
If you do opt to use the DIST method, you must also
activate the distance entry on the load slip:
Once this entry is activated, the distance entry will be available on
your load ticket:
You can then enter the trip distance for each of your loads. If
your costing rate is based on the distance (DIST),
The Logger's Edge
will use this entry (combined with the costing rate) to compute your own
truck cost.
If
you use the distance measure to cost your trucks, you can save yourself
significant data entry time if you set up your distances for each
block-destination combination. These distances are set up in the block
set up wizard:
When you enter a block/destination on your load ticket, the
The Logger's Edge
will auto-fill the distance on the load slip with the matching distance (the
sum of the on- and off-highway distances) from the block setup.
Calculators
Once you've entered your load tickets, you are good to go.
Truck costs will be calculated when you either
1. Run the Vendor Pay Calculator; or
2. Run the Recalc Equipment Cost & Tree Volume Calculator.
The latter option is preferred for loads that have already been paid and you
are merely updating your truck costs. For example, if you have updated
your truck rates or block trip times.
Unlike when you cost your trucks based on time slips, truck costs that
are based on load slips are calculated when you run the Vendor Pay
Calculator, not the employee pay calculator.
Note: If you change the unit of measure for truck costs from one basis
(say Tonne) to another (say Tonne-Hour), you must rerun the vendor
calculator. The Recalc Equipment Cost calculator uses the original basis
and will not update costs correctly (i.e., it will use the new rate with
the originally calculated basis).
3. Reports
There are several good reports that show your truck costs.
Report 1: Block Profit & Loss
This report shows you a pro forma block profit/loss statement. The
standard cost for your own trucks is shown under the heading: 'Own Trucks, Load
Cost'. The report shows the total volume delivered and the cost per unit
of volume (in this case Tonnes). In the example below, the cost of your
drivers (who in this example are paid hourly) is shown under the heading 'Hourly
Employees.'
Report 2: Activity Costs, Summary, by Activity
This report shows the cost of each phase or activity, broken down by type.
The types include: (1) Hourly payroll costs, (2) standard cost for your own
equipment, (3) costs for non-hourly drivers (e.g. paid by the day or trip), (4)
costs for drivers paid by the load, and costs for subcontractors. the
report shows a consolidated total cost, the delivered volume, and the cost per
unit of volume. Thus, the report shows you your per unit comprehensive
costs of performing each phase/activity.
Report 3: Truck Cost
This report shows you the cost of your trucking activity, on a load-by-load
basis. The column 'Own Truck Cost' includes the standard cost of your own
trucks.
Report 4: Log Haul Cost, By Distance
The
report is primarily used for those who track the distances on their load
tickets.
This report summarizes the cost of your trucking activity by block,
destination, and truck. The costs are shown on a per unit of volume basis,
but also on a per trip basis and a per unit of distance basis (e.g. kilometer). This report is especially useful in tracking the
per-kilometer cost of your log-hauling activity.
Activate the 'Calculate Cost Based on Hours' Flag
This flag tells
The Logger's Edge
to use your time slips when costing trucks.
Set up Truck Costs
From the main menu go to Setup | Equipment / Trucks | Trucks | Truck Costing
For each of your trucks, enter your hourly rates. The basis (unit of measure)
is automatically set to hours (HR)
There are 2 rates you can use in the system:
(1) The Standard Cost/Unit. This rate is the cost
of operating your truck for comprising all costs, with the exception of the
driver's cost. This is sometimes referred to as the 'Dry' rate.
(2) The Full Cost/Unit. This is the is the cost
of operating your truck for comprising all costs, including the cost
of the driver. This is sometimes referred to as the 'Fully Founded' or
'All Found' rate.
In the
The Logger's Edge
there is a truck costing worksheet that can be used to build up your
standard and full found costs. See
Truck Cost Worksheet for more detail on this feature.
In
the Truck Cost worksheet, the basis is fixed to be 'HR' (hours) and you
cannot change this setting. Also, remember to set your annual 'cost
basis' equal to your annual operating hours. In this circumstance your
annual operating hours equal your annual cost basis.
This is an example of a truck cost worksheet using hours as the cost
basis:
Time Entry
On your time slips, you enter your trucks, activities and hours worked.
All hours that are coded with a type of production will be counted in the
calculation of your truck costs. Hours that are not coded as
production hours (e.g. maintenance, down, etc.) will not be included in the
calculation.
The
The Logger's Edge
uses time slips for employees driving your own trucks for the costing
calculations, but also uses time slips for contract drivers who drive your
own trucks (these are entered entered Data Entry | Time Slips |
Subcontractors | Enter Slips).
The Logger's Edge
also uses time slips for equipment where no driver is identified (these are
entered entered Data Entry | Time Slips | Equipment | Enter Slips).
If
you want to cost your trucks based on hours, but you actually pay your
drivers based on the load slip, you can enter equipment time slips for your
trucks to track your trucking hours, but avoid having to deal with paying a
specific driver for those hours.
Calculators
Once you've entered your time tickets, you are good to go.
Truck costs will be calculated when you either
1. Run the Employee Pay Calculator; or
2. Run the Recalc Equipment Cost & Tree Volume Calculator.
The latter option is preferred for time slips that have already been paid and you
are merely updating your truck costs. For example, if you have updated
your truck rates and want to recalculate your truck costs.
Unlike when you cost your trucks based on load slips, truck costs that
are based on hours are calculated when you run the Employee Pay
Calculator, not the Vendor Pay Calculator.
Note: If you change the unit of measure for truck costs from one basis
(say hours) to another (say Tonne-Hour), you must rerun the vendor
calculator. The Recalc Equipment Cost calculator uses the original basis
and will not update costs correctly (i.e., it will use the new rate with
the originally calculated basis).
3. Reports
There are several good reports that show your truck costs.
Report 1: Block Profit & Loss
This report shows you a pro forma block profit/loss statement. The
standard cost for your own trucks is shown under the main heading: 'Hourly
Equipment' and sub heading 'Trucking'. In this case, truck costs will be
treated like other hourly equipment costs. The report shows the total volume delivered and the cost per unit
of volume (in this case Tonnes). In the example below, the cost of your
drivers (who in this example are paid hourly) is shown under the heading 'Hourly
Employees.'
Report 2: Activity Costs, Summary, by Activity
This report shows the cost of each phase or activity, broken down by type.
The types include: (1) Hourly payroll costs, (2) standard cost for your own
equipment, (3) costs for non-hourly drivers (e.g. paid by the day or trip), (4)
costs for drivers paid by the load, and costs for subcontractors. the
report shows a consolidated total cost, the delivered volume, and the cost per
unit of volume. Thus, the report shows you your per unit comprehensive
costs of performing each phase/activity.
Report 3: Block Hourly Cost - Fully Founded Cost
This report shows you the fully founded hourly cost of each of your
phases/activities. When you cost your truck by hour, this report will show
the hours & full founded cost for your trucks. It will also show the per
unit of volume and per hourly cost of the trucking activity.
There are two basic ways to implement truck costing for your own trucks in
The Logger's
Edge: (1) Truck costs can be
estimated by an hourly rate applied to time slip entries; or (2) Truck costs can
be estimated by a rate applied to the loads that are delivered by the truck.
In the latter case, you can base your rates on weight (e.g. Tonnes, Tons, etc.),
volume (e.g. M3, MBF, etc.), distance (miles, kilometers), distance-times-weight
(e.g. tonne-kilometers, ton-miles) or tonne-hours (see
How To: Truck
Cost by Tonne Hr).
The most prevalent method to cost company-owned trucks is the second method:
truck cost by load slip. This is the default method installed with
The Logger's
Edge. If you want to cost your
trucks by hour (recorded on time slips), contact a Caribou Representative to
reconfigure your system.
Navigate to Setup | Equipment / Trucks | Trucks | Truck Costing to set up you
truck costing rates.
The grid shows two rates:
- Std Cost / Hour. This cost is the cost of operating your truck, NOT
including the cost of the driver. In reports that rely on this cost
measure, the actual cost of the driver is added to the Std Cost of the truck to
calculate the full cost of operation.
- Full Rate/Hour: This is the cost of operating your truck,
including an estimated cost of the driver.
Under the load-slip method of costing trucks,
The Logger's
Edge will calculate an imputed truck
cost for each load slip.
There are two ways to enter your standard cost rates: (1) direct entry and; (2) the
cost build-up method.
Direct Entry of Truck Cost
Select Add from the window.
This form allows you to directly enter your truck costs. If you
have another system to calculate your costs or you use a reference guide such as
the
"Blue-Book" to estimate your rates, you can just enter them here.
Cost Build-up Method
The cost build-up method provides a standard worksheet that allows you to
build up to your truck costs based on the individual cost components, such
as depreciation, fuel, maintenance costs, etc.
First, highlight a truck and then click on the "Calc Cost" button at the
bottom of the window to bring up a truck cost worksheet for this truck.
The numbers in the
spreadsheet are for illustrative purposes only - the spreadsheet allows you to
calculate your truck costs based on your own costs and working environment. This form allows you to build up the cost of your truck based on your own
experience.
The yellow cells in the worksheet are data entry cells where you provide the
necessary data. The white cells contain calculated values. (The
white cells are also locked and are not editable)
The worksheet is split into 5 panels:
A. Assumptions
Date: Effective date for the standard cost rate.
The Logger's Edge
will use the rate with the most recent effective date that is prior to the date out of the load.
Basis: The basis determines the load attribute (distance,
tonnes, tonne-hrs, etc) to which the standard cost is applied.
In the worksheet above the calculations are based on TONNE_HR, but if you select
a different basis (say TONNE), the calculations will be performed on that basis
instead.
When
truck cost is based on hours,
The Logger's Edge
will automatically set to 'HR' -- you cannot change this setting. In
this case you must set your annual 'cost basis' equal to your annual operating
hours because your annual operating hours are identical your annual cost basis.
- Annual Cost Basis: The number of annual 'units' identified by the cost
basis. For example, if distance is selected as the cost basis, the
annual cost basis would be the number of miles or kilometers.
- Annual Operating Hours: Expected hours for the truck unit to be
utilized for
the year.
- Annual distance traveled: Annual miles/kilometers.
- Annual Load Count: Number of loads the truck is expected to haul
in a year.
- Average weight: Average load weight hauled by that truck.
- Interest Rate on Borrowed Capital: Interest Rate on Debt.
- Expected Life (Hours): Expected life (in hours) for the truck
unit. (Used to determine the expected life of the truck in years
for use in calculating depreciation.)
- Salvage Value: Estimated salvage value for the unit. You
enter the percent; the worksheet applies the percentage to the Purchase
Price to determine the salvage dollar amount.
- Average Investment: The average investment is the acquisition cost
plus the salvage amount divided by two [ (R17 + R12) / 2]. This is the
average capital you have tied up in the truck unit over its useful life.
In the example above the truck unit costs $250,000 and has a salvage
value of $62,500 (25%), which yields an average investment of $156,250.
- Purchase Price: The purchase price of the truck. You can
also add additional miscellaneous costs to build up to a total acquisition
cost.
- Fuel Consumption (Distance/Volume): Miles (or kilometers) per
gallon (or litre).
- Fuel Price Per Unit of Volume: The price per unit of fuel
consumed. (Note: if fuel consumption is in litres, you would enter the
litre price; if fuel consumption is in gallons, you would enter the gallon
price.)
- Machine Years: Truck life equals the lifetime hours divided by
annual hours.
- Operating Wage: Assumed base wage rate for your driver plus your
payroll loaded cost (your additional company payroll costs). In the
example above, the base wage is set to $25.00/Hour and the payroll load is
set at 35% to yield an effective payroll cost of $33.75/Hr.
- Insurance (Percent of average investment): This is the cost of
insurance for the truck unit, expressed as a percentage of your average
annual investment.
B. Ownership Cost
- Depreciation: The depreciation amount per hour equals the
depreciation basis (purchase price - salvage value) divided by machine years. This calculation assumes a straight-line depreciation method.
[ R28 = (R17 - R12) / R20 ]
- Interest on Investment: This is the annual interest amount
(product of interest rate and average investment). [R29 = R10 x R13 ]
- Insurance: This is the insurance percentage multiplied by the
average investment: [R30 = R24 x R13 ]
The total ownership cost equals the sum of depreciation,
interest and insurance. [R32 = R28 + R29 + R30]
Dividing the total ownership cost by the annual operating
hours or the cost basis (TONNE-HR in the example), yields the ownership
component of the standard cost rate.
C. Operating Cost
- Operating Wages: You build up your total hours as the number of
days multiplied by the average hourly work day. This total should
match the total annual estimated hours in row 6. The total hours is
then split between straight time and overtime hours. The overtime
factor is assumed to be time and one-half. In the example above,
the wage rate is $25.00 for straight-time and $37.50 for overtime. The
hourly rates are multiplied by the hours to calculate the estimated annual direct
payroll cost. The loading factor is applied to the direct payroll cost
to calculate the total loaded payroll cost for the year. This total is
then divided by the annual hours to calculate the driver cost per hour.
In the above example, the direct payroll cost is $85,000. The payroll
load is $29,750 (35% of $85,000), yielding a total payroll cost of
$114,750. The hourly cost for the driver is $38.25/Hr ($114,750.00
/ 3,000); the cost per TONNE-HR is $0.96/Tonne-Hr = ($114,750/120,000). This value is subtracted from the full founded cost to
compute the "Dry" or standard cost for the truck without driver.
- Fuel Costs: This is the product of fuel consumption per
unit of distance multiplied by the annual distance traveled and the price
per unit of volume (per gallon or per litre). [R53 = (1/R18) * R7 *
R19]
- Oil and Lube, Including Filters: You input a percentage
of your fuel costs to estimate this value. In the example, the value
of 20% is entered, which when multiplied by the fuel cost, yields a
value of $21,028.57. You can adjust this percentage to match you actual
experience.
- Repairs & Maintenance: There are three rows provided that allow
you to enter your estimated annual repairs and maintenance for the truck
unit. The total for Repairs & Maintenance (R65 = R61 + R62 + R63) in
row 65 is then divided by annual hours to calculate the average hourly
repairs and maintenance cost. [R66 = R65 / R6]; per TONNE-HR is [R66 =
R65 / R5]
- Operating Supplies: An annual entry for miscellaneous costs for
operating the unit. The annual amount is divided by the annual
operating units to determine the cost in row 70.
The total operating costs are the sum of
operating wages, fuel, oil & lube, repairs and maintenance, and operating
supplies. [R72 = R48 + R53 + R57 + R65 + R70]. The operating cost
per hour or per unit (TONNE-HR) is summarized in rows 73 and 74. In the
example, the operating cost per TONNE-HR = $300,921.43 / 120,000 = $2.51 / TONNE-HR.
D. Profit & Risk
The worksheet also includes an allowance for profit and
risk. The allowance equals a user-input percentage applied to the average
investment in row
9. In the example above a 5 percent entry is applied to an average
investment
of $156,250 for a profit/risk allowance of $2.60/Hr or $0.07/Tonne-Hr
E. Summary.
The total hourly operating costs are summarized in the
last section of the spreadsheet. The total hourly costs (Full Founded
Rate) are the sum of the ownership costs (row 34), the operating costs (row 74),
and profit & risk (row 79). [R87 = R34 + R74 + R79]. In the above example,
the total is $116.07/Hr or 2.90/Tonne-Hr. This is the Full Rate / Hr and is used for those
business reports that rely on the 'Full Founded Rate' to measure truck
costs.
The Standard Cost/Hr is also calculated by the worksheet. This cost is the cost of operating your
truck, NOT
including the cost of the driver. Mathematically, it is calculated as
the total in row 87 less the driver's cost in row 50. In the example, the
cost is $116.07 less $38.25, or $77.82/Hr or $1.95/Tonne-Hr. In reports that rely on this cost
measure, the actual cost of your driver is added to the Std Cost to
calculate the full cost of operating the truck unit.
Appendix: Equipment Cost Worksheet - With FormulasThe truck cost worksheet is shown below where the calculated cells have
been replaced with their formulas. You can use this to see exactly how the
spreadsheet works in calculating your costs.
