BOM cost calculator: price a product from its bill of materials.
List what goes into one finished unit — each component, how much of it, what it costs and how much is normally scrapped — then add the labour time and your overhead rate. The calculator gives you the cost per unit, the cost of the whole batch and the price that keeps your target margin. Nothing you type leaves your browser.
How to calculate product cost from a bill of materials.
Material cost per unit is the sum, over every component, of quantity per unit × cost per unit × (1 + normal scrap %). Labour is the hours one unit takes × the labour rate. Overhead — rent, power, supervision, machine wear — is applied at a rate per labour hour (or per machine hour), worked out by dividing the period’s overhead by the hours you expect to work. Add the three and you have the cost of one unit; multiply by the batch size for the batch.
The example is a dining chair: 3 kg of timber at $5.00, a $4.50 hardware kit and half a metre of fabric at $7.00 make $23.00 of material; 15 minutes of labour at $24 an hour is $6.00; overhead at $16 per labour hour adds $4.00. One chair costs $33.00, a batch of 200 costs $6,600, and a 40% gross margin needs a $55.00 price.
Normal scrap belongs in the cost; abnormal scrap does not.
Some waste is part of making the product — offcuts, purge, trim. That normal allowance goes into the bill of materials as a scrap percentage, so it is in every unit’s cost and in the price. Waste beyond it — a spoiled batch, a machine fault — is not a cost of the product; it is a loss of the period, and it should show up as a variance you can investigate rather than vanish into a higher unit cost.
- Normal scrap: in the bill of materials, so it is priced
- Abnormal scrap: a variance or write-off with a reason
- Review the allowance when the variance keeps appearing
From one estimate to every job, at actual cost.
The calculator gives you the standard. In Nonari the bill of materials drives real production jobs: materials are issued at their actual cost, labour and overhead post to the job, work in progress is a live balance, and finished goods land at what the job really cost. When a job uses more than the bill of materials said, the difference posts as a variance with the job number — while the job is still on the floor.
BOM costing on real jobs.
Bills of materials with stages
Components, quantity per unit, scrap allowance and the stage that consumes them.
Production jobs
Issue materials, log labour and overhead, record output.
Live work in progress
WIP is a balance per job while it runs, not a month-end estimate.
Variance against the BOM
Overruns post with the job number while the job is open.
Finished goods at actual cost
Cost of goods sold posts when the product sells, not when materials are bought.
Manufacturing reports
Cost of goods manufactured, WIP ageing and the manufacturing account.
Frequently asked.
How do you calculate cost from a bill of materials?
For each component, multiply quantity per unit by its cost and by (1 + normal scrap %), and add them up for material cost. Add labour (hours per unit × rate) and overhead (hours per unit × overhead rate). The total is the cost of one unit; multiply by the batch size for the batch.
How do I set the overhead rate?
Divide the overhead you expect for a period — factory rent, power, supervision, depreciation — by the labour or machine hours you expect to work in it. $16,000 of monthly overhead over 1,000 labour hours is $16 per labour hour.
Should scrap be included in product cost?
Normal scrap, yes — it is part of making the product, so it belongs in the bill of materials as an allowance. Abnormal scrap beyond that allowance is a loss of the period and should be recorded as a variance or write-off, not hidden in unit cost.
How do I price a product from its cost?
Divide the cost per unit by (1 − target gross margin). A $33 unit at a 40% margin needs a $55 price; at 30% it needs $47.14. Margin is on price, markup is on cost — a 40% margin is a 66.7% markup.
Can accounting software track BOM costs automatically?
Manufacturing accounting software can: the bill of materials drives production jobs, materials are issued at actual cost, labour and overhead post to the job, and variance against the bill of materials is recorded while the job runs. Nonari does this on the same ledger as invoicing and the bank.
Load your bill of materials and run one real job.
15-day free trial, no card. Build a bill of materials, open a job, issue materials and watch WIP move to finished goods at actual cost.