# Build a manufacturing cost estimate

Connect material, setup, runtime, outside processing and inspection into an explicit per-part estimate.

Reviewed: 2026-11-02

## 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](methods/minimum-lot-charges.md).

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](methods/setup-amortization.md#worked-example-plan-actual-output-and-reconciliation). 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](../processes/laser-cutting.md#an-explanatory-timing-model) explains how cutting, piercing and other activities contribute to duration. For welded components, [porosity troubleshooting](../production/process-effects/porosity-in-welds.md) 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](https://www.dfma.com/resources/machining-cost-estimator.asp) 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](../materials/stock-forms/index.md) and [scrap recovery](methods/scrap-recovery-credits.md) |
| Setup | Required setup events and resources occupied | [Setup amortization](methods/setup-amortization.md) |
| Processing | Applicable duration and included rate components | [Machine-hour rates](methods/machine-hour-rates.md) |
| Tool consumption | Usable life, changes and good output | [Tool-life allocation](methods/tool-life-cost-allocation.md) |
| Outside processing | Supplier price, minimum charge and lot definition | [Minimum lot charges](methods/minimum-lot-charges.md) |

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](methods/job-order-costing.md) explains accumulation and reconciliation after production.

## Keep cost, price and delivery separate

A modeled production cost is not a selling price. [Machine-hour rates](methods/machine-hour-rates.md#cost-rate-versus-selling-rate) distinguishes cost rates, markup and margin. [Contribution margin](methods/contribution-margin.md) 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.