BIZOMAT Tools · Money
True Unit Cost
What does this work really cost?
Builds a fully loaded unit cost from material, labour, overhead and other costs, and optionally checks it against the selling price.
Open the calculatorRuns in your browser. No account needed.
How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Material / unit | $ | Bill of materials cost including scrap allowance |
| Labour hours / unit | hr | Standard or measured labour time per unit |
| Loaded labour rate | $/hr | Fully loaded hourly rate (wages plus on-costs) from finance |
| Overhead allocation / unit | $ | Overhead allocation per unit using your approved basis |
| Other cost / unit | $ | Packaging, freight-in, consumables or royalties per unit |
| Selling price / unit (optional, 0 = not used) | $ | Selling price per unit (leave 0 if not comparing) |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Material / unit
- What it is
- The cost of the materials and bought-in parts used in one unit, including an allowance for scrap and offcuts.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $12 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Adds directly to the true unit cost.
- Get it right
- Add the scrap allowance; material that ends in the bin is still paid for.
What this means: Labour hours / unit
- What it is
- The working time needed to make one unit, in hours, from a time study, routing standard or measured records.
- Units and format
- Enter a number in hr: hours. The form accepts 0 hr or more.
- Example
- The form opens with 0.5 hr as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Multiplied by the loaded rate to give labour cost per unit.
- Get it right
- Enter hours, not minutes: 30 minutes is 0.5 hours.
What this means: Loaded labour rate
- What it is
- The full cost of one hour of labour: wages plus on-costs such as superannuation, leave, payroll tax and insurance.
- Units and format
- Enter a number in $/hr: money per hour. The form accepts $0/hr or more.
- Example
- The form opens with $45/hr as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Multiplied by labour hours to give labour cost per unit.
- Get it right
- Use the loaded rate from finance; the base wage alone understates labour cost.
What this means: Overhead allocation / unit
- What it is
- The share of indirect costs, such as supervision, rent, power and equipment, that your costing method assigns to one unit.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $8 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Adds directly to the true unit cost.
- Get it right
- Use the allocation basis your finance team approves (labour hours, machine hours or activity).
What this means: Other cost / unit
- What it is
- Any remaining cost per unit not covered above, such as packaging, inbound freight, consumables or royalties.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $2 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Adds directly to the true unit cost.
- Get it right
- Do not repeat items already in material or overhead.
What this means: Selling price / unit (optional, 0 = not used)
- What it is
- Optional: the price you sell one unit for, so the tool can compare it with the true cost and show the margin. Leave it at 0 to calculate cost only.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $0 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Only changes the margin and the price check, never the true cost.
- Get it right
- Enter the price excluding GST; 0 switches the margin comparison off.
Method and formulas
- Labour = hours per unit × loaded rate
- True cost = material + labour + overhead + other
- Margin = (price − true cost) ÷ price
Limitations
- Overhead allocation is only as good as the basis used
- Average cost; batch-size effects are not modelled
Typical uses
- Costing a new product or job
- Checking whether a price covers full cost
- Finding the largest cost element to reduce
Who it is for
- Estimators
- Production managers
- Owners of small manufacturing businesses
What you get
- True cost per unit
- Cost breakdown with shares
- Margin against price when entered
Interpreting the result
- Reduce the largest element first
- A price below true cost may still be accepted short term only if it covers variable cost
References
- Horngren, Datar and Rajan, Cost Accounting: A Managerial Emphasis (Pearson), job and product costing
BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.