How To Calculate The Cost of Metal Fabrication

Metal fabrication is used widely in manufacturing industry, many people tend to use metal fabrication. Since there are so many people using this technology, what about its cost? How to calculate its cost? Today, this article will talk about the components of the cost of metal fabrication, and we will tell you how to calculate the cost.

List: 1. Components of Cost of Metal Fabrication

         2. Calculation of Cost of Metal Fabrication

Components of Cost of Metal Fabrication

• Direct Material

Direct materials refer to various raw materials and main materials, auxiliary materials, purchased semi-finished products, repair spare parts, packaging materials, fuels, etc., which can constitute product entities or contribute to product formation.

• Direct Labor

Direct wages refer to the wages of production workers directly engaged in the manufacture of products, including: bonuses for basic wages and wages, allowances, labor insurance benefits, and various subsidies.

• Indirect Material Fee

Indirect materials refer to the material costs that an enterprise's production unit consumes during the production process, but cannot or cannot be attributed to a particular product such as machine lubricants, repair spare parts, etc. The collection of overheads can generally be based on original records such as the Material Expense Allocation Table. The general ledger and the ledger of the manufacturing expenses are included.

• Indirect Labor Cost

Indirect labor costs refer to the labor costs of the production units that are not directly involved in the production of the products or other labor that cannot be classified into direct labor, such as repair workers' wages and management personnel's wages. The indirect labor costs shall be recorded in the relevant expense expense account according to the amount determined in the “Wage and Benefits Expense Allocation Table”, and the accounting vouchers shall be prepared according to the “Wage and Benefits Expense Allocation Table”, and then recorded in the “Manufacturing Expenses” account. .

• Low Value Consumables

Low-value consumables refer to various labor methods that are not accounted for as fixed assets, including general tools, special tools, management tools, labor protection supplies, etc. Low-value consumables consumed by production units, because of their low value or easy damage, generally do not need to calculate their transfer value as strictly as fixed assets, but use a relatively simple method to transfer their costs into product costs once or in part. When adopting the one-off amortization method, the value of the low-value consumables can be used. Generally, together with other materials, the “material cost allocation table” can be compiled and directly included in the relevant costs and expenses; The value of low-value consumables is to be included in the relevant cost and expenses according to the period of use.

• Depreciation Charge

The depreciation charge refers to the part of the value of fixed assets transferred to the cost due to loss during use. The collection of the depreciation expense of fixed assets is carried out by summarizing the “depreciation expense allocation table” of the entire enterprise by compiling the depreciation calculation schedules of each workshop and department compiled on a monthly basis. The manufacturing expense ledger and general ledger are registered according to the Depreciation Expense Allocation Table.

• Other Expenses

Other expenditures of enterprise production units refer to expenditures other than the above-mentioned various expenses, such as utilities, travel expenses, transportation expenses, office expenses, design drawing fees, and labor protection fees. Most of these expenses are paid by bank deposits or cash, and are not directly related to the products. Generally, there are no separate cost items. When expenses occur, they should be recorded in the "manufacturing expenses" general ledger and detailed ledger after preparing accounting vouchers one by one according to the relevant original vouchers.

Calculation of Cost of Metal Fabrication

1. Calculated quantity: According to your requirements and the final use of the product, determine the amount of paper required for each part. These two factors will help you determine the exact number of requirements for the entire project. Once you decide to use the material, you will be able to determine the raw material budget. Let the total cost be’A'.

2. Get quotation. Please contact your manufacturer and get quotations based on materials, quality and work to be done. The supplier will provide a quote based on the amount of paper to be manufactured, the equipment to be used, the skills required for the job, and the time required to manufacture the paper. Let this total cost be ‘B'.

3. Calculate the freight. Transportation costs must either be borne by you or take into account your entire manufacturing and raw material costs. It is very important to determine the fees charged to you by suppliers and manufacturers. If you think this is too much, you can choose to outsource the freight to other service providers. Let the total cost be’C'.

4. Determine any fees that may be charged in addition to the above fees. For example, you may need to pay an extra fee for a quality certificate. Let this total cost be ‘D'.

5. Calculate the total cost. The total cost is calculated by adding the estimates calculated in steps 1, 2, 3 and 4. So the total cost equals to A + B + C + D.

From all the information we give above, you know the factors of metal fabrication cost, also you know the way to calculate cost. We hope this article will do you a favor.