GIFSQ Tools · Module 18 — Manufacturing, Costing & Supply Chain · Tool 348 of 500
Build the unit cost of a product from its three parts — materials, labour and overhead — then scale it to the run size and see which part dominates the cost.
Try sample values — fills the form with the worked example below.
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Unit cost ($)
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Total run cost ($)
Overhead share (%)
Equation: Unit cost = material + labour + overhead (per unit). Total run cost = unit cost × units. Overhead share (%) = overhead ÷ unit cost × 100.
Method: Absorption costing at unit level: the three cost elements are added per unit, then scaled by the run size. Overhead is the allocated share of factory overhead (rent, energy, supervision, depreciation) per unit.
Assumptions: the per-unit figures are already in the same currency and for the same unit; overhead is a fixed allocation per unit, not a rate that changes with volume.
Limitations: the tool does not separate fixed from variable cost, so it cannot show the break-even volume; overhead allocation choices change the unit cost — agree the allocation basis before comparing products.
Rounding: costs to 2 decimal places; overhead share to 2 decimal places; intermediates unrounded.
This is a calculation aid, not a laboratory report — confirm against your accredited method before citing a value.
Method: Absorption costing at unit level: the three cost elements are added per unit, then scaled by the run size. Overhead is the allocated share of factory overhead (rent, energy, supervision, depreciation) per unit.
Assumptions: the per-unit figures are already in the same currency and for the same unit; overhead is a fixed allocation per unit, not a rate that changes with volume.
Limitations: the tool does not separate fixed from variable cost, so it cannot show the break-even volume; overhead allocation choices change the unit cost — agree the allocation basis before comparing products.
Rounding: costs to 2 decimal places; overhead share to 2 decimal places; intermediates unrounded.
This is a calculation aid, not a laboratory report — confirm against your accredited method before citing a value.
Worked example: Material $1.20, labour $0.80, overhead $0.50 per unit, 1,000 units: unit cost = $2.50; total = $2,500.00; overhead share = 20.00%.
Enter values above to see results.
If overhead is over half the unit cost, the allocation basis matters more than the recipe — check it before quoting a price. Tool 348 of 500 — GIFSQ
