Cost per board foot is the number that tells you whether the sawmill is making money or just making sawdust. It is also easy to get wrong. A mill can look profitable on a per-log basis and still lose money on every pass through the edger. The calculation itself is simple: add up the real costs of turning logs into lumber, then divide by the board feet you actually produced. The hard part is deciding what belongs in the numerator and what belongs in the denominator. Here is a practical way to build the number and keep it honest.

What a Board Foot Actually Measures

One board foot is 144 cubic inches of lumber, typically a piece 1 inch thick, 12 inches wide, and 12 inches long. Sawmills usually report production in board feet or thousand board feet (MBF). The board feet in your cost calculation should come from your actual lumber tally, not from the log scale.

Log scale estimates what a log might yield. Lumber tally records what came out of the mill. If you mix the two, your cost per board foot will drift, sometimes by enough to hide a real problem. Keep one unit and one period. If your accounting system tracks cost per MBF, divide that figure by 1,000 to get cost per board foot.

The Core Formula

Cost per board foot = (Log cost + Labor + Energy + Depreciation + Overhead) ÷ Board feet produced

The parentheses matter because every cost in the numerator must belong to the same period as the board feet in the denominator. If you calculate log cost for January but use February production, the result is fiction. Pick a month, a quarter, or a production run. Then gather every cost tied to that output.

Logs: The Largest and Most Misread Cost

For most mills, logs are the biggest single cost. Delivered log cost can include stumpage, cutting, skidding, hauling, scaling fees, and yard handling. If you buy logs at the gate, include freight and any fees. Do not stop at the invoice price, though. The cost that matters is log cost per board foot of lumber, not per board foot of log scale.

Suppose a load scales 5,000 board feet but yields 4,200 board feet of lumber after breakage, trim, and downgrade. The log cost is spread over 4,200 board feet, not 5,000. Track yield by species, diameter, and grade if you can. A small change in log quality can move cost per board foot more than a change in electricity rates.

Labor and Energy: The Costs That Move with Runtime

Labor includes wages, payroll taxes, benefits, training, and supervision. If a worker splits time between the sawmill and the yard, allocate that time with a reasonable method and stick to it. Paid downtime and cleanup are real costs. Leaving them out makes your mill look more efficient than it is.

Energy covers electricity for motors, dust collection, lights, and controls, plus diesel for loaders, forklifts, and trucks. If you run a dry kiln, drying fuel belongs in the cost of the lumber that goes through it. If you sell green lumber, keep kiln costs out. Consumables such as saw blades, guides, lubricants, and hydraulic oil often sit near energy in the ledger. Group them consistently so month-to-month comparisons mean something.

Depreciation and Overhead: The Quiet Costs

Depreciation spreads the cost of equipment, buildings, and vehicles over their useful lives. You can use straight-line depreciation or an hours-based method. If you lease a piece of equipment, use the lease payment instead of depreciation. Do not count both. The goal is to reflect the cost of having that asset available to produce lumber.

Overhead includes insurance, property taxes, office wages, accounting, software, shop supplies, compliance costs, and interest. Some overhead changes with production. Much of it does not. Fixed costs per board foot fall when you cut more and rise when you cut less. That is why cost per board foot is not a permanent number. It is a snapshot of your mill at a given volume and cost structure.

A Worked Example You Can Rebuild with Your Numbers

Assume a one-shift mill for one month. The figures below are placeholders, not market prices. Replace every one with your own ledger totals.

• Logs delivered and yard handling: $28,000
• Labor including payroll taxes and benefits: $14,000
• Energy and consumables: $4,500
• Depreciation on mill equipment and vehicles: $3,000
• Overhead: $5,500

Total cost: $55,000. Board feet produced: 80,000. The calculation is $55,000 ÷ 80,000 = $0.69 per board foot, rounded. If production rose and fixed costs stayed flat, the per-foot figure would fall. If log and labor costs rose along with output, the drop would be smaller. That is the push and pull you are trying to see.

Keep the Number Useful Month to Month

A single cost per board foot figure is interesting. A trend is useful. Track the same categories every month, and separate variable costs from fixed costs. Review log yield, downtime, energy spikes, and blade costs when the number moves. Match costs to production, not sales. If you cut logs in March but sell the lumber in May, the cost belongs with the March production.

Use accrual accounting if you can. It gives you a clearer view of what it costs to make lumber in a given period. If you prepare financial statements for a lender or tax filing, work with a qualified accountant. Operational cost tracking and formal accounting are related, but they are not the same job.

Turning the Number into Decisions

Cost per board foot helps you price lumber, bid on timber, evaluate a second shift, and decide whether a piece of equipment is worth buying. If your cost is above what your grade mix can fetch, you have three levers: improve yield, reduce cost, or change the product mix. Recalculate whenever log prices, wage rates, energy costs, or production volume change. The number is not a verdict. It is a tool for asking better questions.

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