Production Cost Calculator
Calculate total cost per unit, overhead allocation, and recommended selling price at 20%, 30%, and 40% gross margins. Includes a cost breakdown visualization.
Cost Breakdown
Selling price = Total cost ÷ (1 - Gross Margin %). Gross margin measures profit as % of revenue.
Frequently Asked Questions
Variable costs change with production volume: raw materials, direct labor, packaging. Fixed costs stay constant regardless of output: rent, equipment depreciation, salaried management. Overhead allocation spreads fixed costs across units produced.
Selling price = Total cost ÷ (1 - Gross Margin %). Example: $10 cost at 30% margin = $10 ÷ 0.70 = $14.29. Note: this is different from markup, where you add a % to cost: $10 × 1.30 = $13.00 (23% gross margin).
Contribution Margin = Revenue - Variable Costs. It represents the amount available to cover fixed costs and profit. Contribution Margin % = (Revenue - Variable Costs) ÷ Revenue. Products with a high contribution margin are most valuable to produce.
Common methods: As a % of direct labor cost (50–200%), as a % of direct material, or as a fixed $ per machine hour. For simplicity, many small manufacturers use 80–150% of direct labor cost as their overhead rate.
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