Manufacturing & IndustrialLot Sizing
Batch Production Cost Calculator
Calculate batch production costs by amortizing machine setup and tooling changeover over production lot sizes.
Batch Setup & Variable Run Parameters
Total Batch Cost
—
Setup + Variable
Cost Per Unit
—
absorbed per unit
Setup Amortization
—
setup cost / batch size
Batch Cost Formula
Cost Per Unit = (Setup & Changeover Costs + Batch Overhead) ÷ Batch Size + Variable Cost Per Unit- Setup Costs: Tooling changeover, machine recalibration, fixture mounting, and test scrap.
- Batch Overhead: Engineering sign-off, work order documentation, and lot testing.
- Variable Cost Per Unit: Sum of unit material, operator labor, and machine run costs.
Step-by-Step Worked Example
Scenario: Running a batch of 500 precision CNC shafts
Calculation Steps:
- Total Fixed Setup = $1,500 + $500 = $2,000 ($4.00 / unit)
- Variable Cost Per Unit = $12.00 + $8.00 + $5.00 = $25.00 / unit
- Total Batch Cost = $2,000 + ($25.00 × 500) = $14,500
- Cost Per Unit = $14,500 / 500 = $29.00 / unit
Result: Total batch cost is $14,500 ($29.00 per unit). Setup amortizes to $4.00 per unit (13.8% of total cost).
How to Use This Calculator
- 1Enter machine setup, fixture preparation, and changeover costs.
- 2Add variable costs per unit for raw material, labor, and machine spindle run time.
- 3Enter batch size to analyze unit cost and setup amortization.
Assumptions & Limitations
- Setup cost is incurred once per batch regardless of run time.
- Yield is 100% unless scrap is explicitly built into variable unit materials.
Frequently Asked Questions
How do larger batch sizes reduce cost per unit?
Fixed setup and tooling expenses are spread across a larger number of finished parts, dramatically reducing the per-unit setup amortization.
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