Costing worked example

Unit Cost at 2.16% expected scrap rate: a worked example in costing

This worked example runs the unit cost numbers for a tougher week than the baseline: 2.16% expected scrap rate instead of the typical 3%. Roll labor, material, overhead, setup, scrap, and margin into a per-part quote.

The inputs for this scenario

  • Material cost per part: 2.5 $ (held at the documented default)
  • Loaded labor rate: 38 $ / hr (held at the documented default)
  • Cycle time: 45 sec / part (held at the documented default)
  • Machine / overhead rate: 55 $ / hr (held at the documented default)
  • Setup cost: 240 $ / run (held at the documented default)
  • Batch size: 500 parts (held at the documented default)
  • Expected scrap rate: 2.16 % (the input this scenario stresses; the baseline uses 3)
  • Target margin: 25 % (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Labor per part = labor rate × cycle time ÷ 3,600.
  • Unit cost works out to 4.23 $ / unit at these inputs, and this is the headline figure for the scenario.
  • Quote price works out to 5.65 $ / unit at these inputs.
  • Labor + overhead works out to 1.16 $ / unit at these inputs.
  • Setup adder works out to 0.48 $ / unit at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where expected scrap rate sits at 3% and the headline result is 4.27 $ / unit, this scenario comes in 0.86% below the baseline at 4.23 $ / unit.
  • Use it before sending a quote, comparing two process routes, or deciding a batch size. Rerun whenever cycle time, wage, scrap, or batch size changes — those move the result most, and setup-per-part swings sharply on small runs. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • Unit cost: 4.23 $ / unit (headline result)
  • Quote price: 5.65 $ / unit
  • Labor + overhead: 1.16 $ / unit
  • Setup adder: 0.48 $ / unit

Run it with your numbers

  • To rerun this with your own numbers, open the live Unit Cost calculator, set expected scrap rate to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.