Setup Cost Calculator
Cost a changeover in setup labour, lost production and start-up scrap.
What this calculator does
Setup time costed at labour and, when entered, lost production, plus scrapped material. Period and per-unit views appear only when the user supplies the counts.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Setup hours per changeover
- — number value.
- Setup labour cost per hour
- — number value.
- Cost of lost production per hour (optional)
- — Optional component. Leave at 0 to exclude it from the result. Only when the line cannot run during the changeover..
- Material scrapped during setup (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Setups in the period (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Units per batch (optional)
- — Optional component. Leave at 0 to exclude it from the result. Used to show setup cost per unit..
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Cost per setup = Setup hours × (Labour rate + Lost production cost per hour) + Material scrapped during setup
Worked example
A 2.5-hour changeover
Setup labour, plus lost production and scrapped material when you enter them.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: Rice University — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
The labour, lost production and scrapped material a changeover costs, with the period and per-unit views shown when entered.
The question it answers: What is the scrap, the rework and the yield loss on this line actually costing us?
The formula
Cost per setup = Setup hours × (Labour rate + Lost production cost per hour) + Material scrapped during setup
- h — Setup hours
- (hour). Time per changeover.
- r — Setup labour rate
- (currency). The user's own cost per hour.
- d — Lost production cost per hour
- (currency). Optional. Only when the line cannot run during the changeover.
- s — Material scrapped during setup
- (currency). Optional.
- N — Setups in the period
- (count). Optional. Used to show the period cost.
- n — Units per batch
- (count). Optional. Used to show setup cost per unit.
Units: Currency; hours; counts.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
Setup time costed at labour and, when entered, lost production, plus scrapped material. Period and per-unit views appear only when the user supplies the counts.
Assumptions built into the result
- Industry: Every cost, rate and standard is the figure the user entered, in the currency they chose; no exchange rate is applied.
- Mathematical: Costs and output cover the same period or the same job.
Figures this calculator will never guess for you
- No industry average, benchmark or target cost is supplied.
- No standard rate, wage or material price is assumed on the user's behalf.
- Optional components are excluded from the result when left at zero.
- No opportunity cost of downtime is assumed; it counts only when the user enters it.
Limitations
- Arithmetic over the figures entered — it cannot tell whether the costs, standards or allowances behind them are right.
- A target cost, an industry benchmark and the organisation's own standard are different things; only the figures entered are used.
- Lost production is valued at the rate the user enters; it is not derived from throughput or margin here.
Source and version
- Standard or reference
- Managerial accounting — job order and process costing — OpenStax (Rice University) (Principles of Accounting, Volume 2: Managerial Accounting (OpenStax) — job cost is direct materials plus direct labour plus overhead applied at a predetermined rate; unit cost is total production cost divided by the units produced.)
- Published source
- Rice University — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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