BOM cost calculator: roll up a multi-level bill of materials

Multiply each component’s quantity per unit by its unit cost, add scrap, then add the labor and overhead for that assembly.

Assembly cost = sum of (qty per × (1 + scrap %) × unit cost) + labor minutes ÷ 60 × labor rate + overhead

Example: a frame uses 22 ft of steel tube at 3.10 dollars per foot with 8% scrap. That line costs 22 × 1.08 × 3.10 = 73.66 dollars. Add 70 minutes of welding at 32 dollars an hour (37.33) and overhead at 24 dollars per labor hour (28.00).

A rollup costs the lowest sub-assemblies first, then carries each one’s full cost up as a unit cost in its parent. The top product ends up with every level’s material, labor and overhead inside it.

Katana works the same way in a multilevel recipe: a sub-assembly’s manufacturing cost is its material cost plus its production cost. When there is stock, Katana uses the sub-assembly’s average cost instead.

Example: a workbench holds a frame (164.12 dollars rolled up), a top (122.50) and a hardware kit (6.45). Those three, a carton and 15 minutes of packing make the workbench cost of 313.47 dollars.

Scrap raises the quantity you pay for, and unit conversion puts the quantity and the price in the same unit.

• Scrap added on top: qty × (1 + scrap %). 10 at 5% buys 10.5.
• Scrap as share lost: qty ÷ (1 − scrap %). 10 at 5% buys 10.53.
• Same kind of unit: the tool converts with NIST factors (1 in = 2.54 cm, 1 lb = 0.4535924 kg, 1 gal = 3.785412 L).
• Different kinds: enter how much one unit weighs or measures, such as 1 ft of tube = 1.9 lb.

Example: 6 oz of weld wire priced at 4.20 dollars per pound is 6 ÷ 16 = 0.375 lb, so 1.58 dollars before scrap.

Use one row per component with these columns: Parent, Component, Qty per, Unit, Unit cost, Cost unit, Scrap %. A component that also appears as a Parent is a sub-assembly, and its cost is rolled up for you.

• One-level parts list: leave out Parent and every row counts toward one product.
• Indented BOMs: a Level column (1, 2, 3 or 1.2.1) works in place of Parent.
• Katana: its recipe file uses Product variant code / SKU, Ingredient variant code / SKU and Quantity. The tool reads those headers.
• QuickBooks Online: the Purchase cost on each inventory product is a good starting unit cost.

Copy the cells, paste them above, and download the costed BOM back into Excel. Once the sheet runs your quotes and reorders, our field guide on the spreadsheet only one person understands covers what to do next.

The IRS lists the basic elements of cost for goods you manufacture as direct materials, direct labor and certain indirect costs. Those are the three lines this calculator splits out.

Overhead can be applied per labor hour, as a percentage of labor or as a percentage of material. Pick the method your accountant uses so the quote matches the books. If a tariff or freight change moves part prices, the tariff price increase calculator and the landed cost calculator work out the new unit costs.