Effects of the annual use and the depreciation method upon the fixed operating costs of a tractor, no-till seeder and grain harvester

Abstract

Hourly fixed costs were calculated for an agricultural tractor, no-till seeder and a grain harvester, with sizes typical for Chile: 90 HP, 17 rows and 14 feet, respectively. The effects of annual use (hr) and of three depreciation methods upon these costs were analyzed.
The results showed that the costs decrease importantly as the hours of annual use increase; this effect is larger, in $/hr, when the increment occurs in machines that are used only a few hours per year. It was also established that the Sum of The Years Digits and Declining Balance depreciation methods reflect economical reality better than the Straight Line method, although this last one is used for agricultural enterprises accounting purposes.