Build a manufacturing cost estimate
Connect material, setup, runtime, outside processing and inspection into an explicit per-part estimate.
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Worked example: a 100-part bracket order
In this illustrative bracket estimate, 100 accepted parts cost $1,500 ($15 each) and 20 cost $780 ($39 each). Both quantities use one $300 setup, one finishing lot and a separate $50 batch inspection. Finishing stays at $250 because the quote takes the larger of the extended charge ($2 × part count) and a $250 minimum per lot.
The USD estimate assumes a sequential route, no rejects, $5 of material per part and four minutes of runtime per part at an inclusive $60/hour. The $300 setup uses the resource burden in the setup guide. Inspection is excluded from the other amounts. The estimate excludes taxes, freight, selling expenses and profit.
| Component | Calculation | Batch cost |
|---|---|---|
| Material | 100 × $5 | $500 |
| Setup | One event | $300 |
| Runtime | 100 × 4/60 hours × $60/hour | $400 |
| Outside finishing | Greater of $200 and $250 | $250 |
| Inspection | One batch activity | $50 |
| Total | Sum of distinct components | $1,500 |
What changes when the order changes?
At 20 accepted parts, material and runtime fall to $100 and $80. Setup, finishing and inspection stay at $300, $250 and $50, respectively. The unchanged batch charges are spread across fewer parts.
This is a sensitivity example, not a prediction that every smaller order follows those rates. A different route, inspection scope, tooling need or supplier quote changes the inputs. Repeated deliveries may require repeated setups and outside-processing lots.
For laser-cut components, laser timing explains how cutting, piercing and other activities contribute to duration. For welded components, porosity troubleshooting shows why the original route may need additional examination or repair. Neither a cycle-time model nor a defect observation determines those additional costs automatically.
Build the estimate around the production route
For each route step, record the number of setups, the duration and rate of recurring work, and the accepted quantity. Apply outside-service charges at the lot or invoice level specified in the quote. See Boothroyd Dewhurst's machining cost guide for the material, setup, cycle and tool-wear components.
Connect each cost to its driver
| Cost | Typical driver to establish | Detailed guide |
|---|---|---|
| Material | Purchased stock and attributable consumption | Stock forms and scrap recovery |
| Setup | Required setup events and resources occupied | Setup amortization |
| Processing | Applicable duration and included rate components | Machine-hour rates |
| Tool consumption | Usable life, changes and good output | Tool-life allocation |
| Outside processing | Supplier price, minimum charge and lot definition | Minimum lot charges |
Inspection and handling may be separate activities or included in another rate. Name the convention once so the same work is not charged twice. The job-order costing guide explains accumulation and reconciliation after production.
Keep cost, price and delivery separate
A modeled production cost is not a selling price. Machine-hour rates distinguishes cost rates, markup and margin. Contribution margin addresses a different cost basis again.
Nor does adding operation durations produce a promised delivery date. Queues, outside-service timing and calendars require scheduling information. Compare actual completion and consumption with the estimate using the same quantity and activity boundaries before changing future assumptions.
Sources and scope
Reviewed November 2, 2026 PST. The structure is explanatory synthesis; the numerical example is original and hypothetical. The linked component guides provide source-specific costing detail. This guide is a management estimate, not an inventory-accounting policy.