Roll up multi-material BOM cost in one screen. Add labour, overhead, scrap. Get total cost per unit and the selling price that hits your target margin.
ERPDrive does this kind of calculation in real-time across your entire item master, vendor list, and production orders. See how, in a 30-minute demo personalized to your factory.
A complete BOM (Bill of Material) cost has 4 components: (1) Raw material cost - the sum of (qty × rate) for every material that goes into one unit; (2) Scrap allowance - typically 2-5% of material cost to account for cutting loss, rejection, and process scrap; (3) Direct labour - shop-floor wages per unit produced; (4) Overhead absorption - factory overhead allocated per unit based on machine hours, labour hours, or activity rate.
Standard cost is a frozen reference set at the start of the year (or quarter) used for budgeting and reporting. Actual BOM cost is what you pay today - raw material rates fluctuate (steel rates moved 18% last year), labour rates change with attrition, overhead absorption shifts with production volume. For quoting, always use current actual cost. For variance reporting, compare actual against standard.
Indian manufacturing benchmarks: high-volume commodity parts run 12-18% gross margin; precision machining and OEM-direct supply run 22-30%; specialty / low-volume / high-mix runs 35-50%. If you compete on price (low margin), focus on cost discipline and turnover. If you compete on capability (high margin), focus on engineering and quality.
Per machine hour is the standard practice in CNC/job-shop manufacturing because overhead is largely time-based (rent, electricity, depreciation, supervision). Sum your monthly factory overhead, divide by total machine hours available, and apply that ₹/hour rate to every job. ERPDrive supports per-machine, per-cost-centre, and activity-based overhead absorption out of the box.
For a multi-level BOM (sub-assemblies, then assembly), you must roll up bottom-up: calculate the cost of each sub-assembly first (including its own scrap, labour, and overhead), then use that cost as the 'material rate' for the parent assembly. This is tedious in Excel and error-prone when sub-assemblies change. ERPDrive does multi-level rollups automatically and re-calculates the parent cost whenever any leaf rate changes. Book a demo to see it.
BOM cost is what it costs to MAKE the unit. Product cost (or full landed cost) adds packaging, transport-in, transport-out, royalties, and any direct selling expenses. For Indian manufacturers, also add GST credit considerations (input tax credit reduces effective material cost). Use BOM cost for production decisions; use product cost for sales pricing and margin reporting.