BOM cost rollup calculator — standard cost per unit
BOM cost rollup calculator: turn component quantities, scrap, labour and overhead into one standard cost per unit, plus margin at your sell price.
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Short answer
A BOM cost rollup adds every component's scrap-adjusted quantity times its unit cost, then adds labour hours times rate and applied overhead. On this eight-line pump BOM the rolled material cost is $251.45, labour and overhead add $165.07, and the standard cost per unit is $416.52, which is a 24.1% gross margin at a $549.00 sell price.
A BOM cost rollup is the number every other manufacturing number depends on. It sets inventory value, it sets the standard your purchase price variance is measured against, and it decides whether a quote is profitable or merely busy.
Paste your component lines as component, qty per assembly, unit cost, scrap %. The calculator rolls material with scrap applied, adds labour and overhead, and shows what each line contributes to the finished unit cost and to margin at your sell price.
Scrap is applied as a yield, so a 2% scrap line needs 1.0204 units issued for every one consumed. Lines it cannot read are skipped rather than guessed at.
Your numbers
One line per component: name, qty per assembly, unit cost, scrap % (optional). Commas, tabs, semicolons or pipes all work. Header and # comment lines are ignored.
$
Net of discounts. Leave freight-out and commission out of it.
Result
Standard cost per unit
$416.52
$132.48 gross margin at $549.00 (24.1%)
Rolled material cost (8 lines)$251.45
of which planned scrap$2.65
Labour cost$67.38
Overhead applied$97.69
Gross margin per unit$132.48
Gross margin / markup24.1% / 31.8%
Every line at its scrap-adjusted quantity, and its share of finished unit cost.
Line
Qty/assy
Scrap
Eff. qty
Extended
% of cost
Cast housing
1.00
2.0%
1.020
$43.37
10.4%
Stainless shaft
1.00
1.0%
1.010
$18.94
4.5%
Bearing set
2.00
0.0%
2.000
$22.80
5.5%
Impeller
1.00
3.0%
1.031
$27.63
6.6%
Mechanical seal
1.00
1.5%
1.015
$34.72
8.3%
Gasket kit
1.00
5.0%
1.053
$4.84
1.2%
Fasteners (kit)
1.00
0.0%
1.000
$3.15
0.8%
Motor
1.00
0.0%
1.000
$96.00
23.0%
Labour
1.75 h
—
—
$67.38
16.2%
Overhead applied
—
—
—
$97.69
23.5%
Total standard cost
—
—
—
$416.52
100.0%
material = 8 lines, scrap-adjusted = $251.45
labour = 1.75 h × $38.50 = $67.38
overhead = 145% × $67.38 = $97.69
standard = $251.45 + $67.38 + $97.69 = $416.52
margin = $549.00 − $416.52 = $132.48 (24.1%)
24.1% gross margin, a 31.8% markup on cost. Normal for assembled product, and sensitive to material moves: a 5% rise in material alone would take 2.3 points off it.
Everything is computed in your browser. Nothing you type is sent anywhere or stored.
The formula
Standard cost = Σ (Qty ÷ (1 − Scrap %) × Unit cost) + (Labour hours × Labour rate) + Overhead applied
Qty
Quantity of the component consumed by one good assembly, per the BOM line.
Scrap %
Share of the issued quantity lost to scrap or setup. Raises the quantity you must buy, not the price you pay.
Unit cost
Standard cost of one component unit. Use landed cost if that is how you value inventory.
Labour hours
Routing hours per assembly, setup amortised over the run quantity.
Labour rate
Loaded hourly rate: wage plus payroll tax, benefits and paid absence.
Overhead applied
Either a percentage of labour cost or a fixed amount per unit, depending on which driver you can defend.
This is the yield treatment of scrap: 2% scrap means 2% of what you issue is lost, so you must issue qty ÷ 0.98. Some systems instead multiply by 1 + scrap %, which produces a slightly lower requirement. Pick one convention and hold it across every BOM, or your rolled costs will not be comparable.
Standard cost $416.52 · gross margin $132.48 (24.1%)
Scrap-adjusted material rolls to $251.45, of which $2.65 is planned scrap. Labour is 1.75 × $38.50 = $67.38, and overhead at 145% of labour adds $97.69. Total standard cost is $416.52. Against a $549.00 sell price that leaves $132.48 of gross margin, a 24.1% margin and a 31.8% markup on cost.
What belongs in a rolled standard cost
Three buckets, and one bucket people keep loading by mistake. Material and labour are usually clean. Overhead is where costing arguments live, and selling cost is where rolled standards quietly go wrong.
Cost element
What belongs in it
The error we see most
Material
Scrap-adjusted quantity × current standard unit cost, landed if you value inventory landed.
One line on last purchase price and the next on a two-year-old standard.
Labour
Routing hours at a loaded rate, with setup spread over the normal run quantity.
Using the base wage, so payroll tax, benefits and paid absence never reach the standard.
Overhead
A rate on a driver you can defend: labour hours, machine hours, or a flat amount per unit.
One plant-wide percentage of labour applied to a hand-assembled part and a machine-intensive one.
Not in standard cost
Selling, distribution, commission and admin. These sit below the gross margin line.
Loading freight-out into the rollup, which inflates inventory value and hides the real margin.
Scrap changes the quantity, not the unit price
A 5% scrap factor on a $4.60 gasket does not make the gasket cost $4.83. It means you consume 1.0526 gaskets per assembly and the line rolls at $4.84. Treating scrap as a price uplift gets you close on a single-level BOM and badly wrong on a four-level one, because the uplift compounds at every level while the yield loss does not.
Reading the line-by-line contribution
The share-of-total column is the useful one. On the seeded example the motor alone is 23.0% of unit cost, and the three largest component lines are 41.8% of unit cost and 69% of material spend. That tells you where a purchasing win actually moves the standard, and where a 10% saving buys you nothing. Chase the top three lines, then stop.
One line above 20% of cost — negotiate it, dual-source it, or design it out. Track the result with the purchase price variance calculator.
Labour plus overhead above half of unit cost — the win is in the routing and downtime, not in purchasing.
A long tail of sub-1% lines — leave them alone. Their cost is administrative, not material.
Rolled cost against actual cost
A rollup is a forecast of what a unit should cost. The variance accounts are where you find out what it did cost: price variance on the purchased lines, efficiency and rate variance on labour, absorption variance on overhead. If those accounts are consistently large in one direction, the standard is stale rather than the shop floor being bad.
Assembling the inputs is the slow part — current standard costs per component, live routing hours, this year's overhead rate, all at the revision level actually being built. With ERPray you ask for it: "rolled standard cost for assembly PUMP-4200 with each component's share of total cost" — computed from your own item and BOM records, with the query shown underneath so you can check the revision it used.
Frequently asked questions
How do you calculate a BOM cost rollup?
For each component line, divide the quantity per assembly by its yield (1 minus scrap %), multiply by the unit cost, and sum the lines. Add routing labour hours times a loaded rate, then apply overhead as a percentage of labour or a fixed amount per unit. The total is standard cost per finished unit.
Should scrap be applied to quantity or to cost?
To quantity. Scrap means you must issue more components than the assembly consumes, so the quantity rises and the unit price stays as purchased. Dividing quantity by the yield is the accurate treatment. Multiplying cost by 1 plus the scrap rate gives a similar answer on one level and drifts on multi-level BOMs.
What overhead rate should I use in a BOM rollup?
Whichever driver explains your overhead spend. A percentage of labour cost works when overhead follows headcount. A fixed amount per unit or per machine hour is better when overhead is driven by equipment, floor space or energy. Applying one plant-wide labour percentage to very different products cross-subsidises them.
Why does my rolled cost differ from actual cost?
Because a rollup uses standards and actuals use what happened. The differences show up as purchase price variance, labour efficiency and rate variance, and overhead absorption variance. Small two-way variances are normal. A large one-way variance for several months means the standard needs updating, not that the shop floor is failing.
Does a BOM cost rollup include freight and duty?
It should if you value inventory at landed cost, and then the unit cost on each line is the landed figure, not the supplier invoice price. Be consistent: mixing landed cost on imported lines with invoice price on domestic ones makes margin by product line unreliable and understates the true cost of imports.
How often should standard costs be rolled again?
Annually as a minimum, and immediately after any BOM revision, routing change or material price move large enough to matter. Many shops re-roll quarterly. The test is your variance accounts: if purchase price variance runs one way for three months, your standards are behind the market.
This calculator needs you to find the inputs first. ERPray pulls them from your own ERP account and computes the answer live — with the exact query shown so you can check it.