CNC machining cost breakdown: all ten cost categories, in process order

Give the same drawing to two estimators in the same shop and you get two different costs. Neither of them did the arithmetic wrong. They included different things — and nothing in either spreadsheet says what was left out.

That is the actual problem this guide solves. Not the arithmetic, which is easy, but **agreeing on what belongs in the number** so that two costings can be compared at all.

Why two people cost the same part differently

In practice the gap almost always comes from the same handful of places:

• One counted the stock that went into the machine; the other counted the finished part weight. The difference is chips, and chips were paid for.
• One included setup; the other spread it over a lot size they did not write down.
• One included tooling; the other treated it as shop supplies.
• One included scrap; the other costed the parts that shipped.

Follow the routing, not your memory

The reliable way to catch everything is to walk the part through the shop in order and ask at each step what it consumed. The routing already exists on the traveler — you do not have to invent the sequence.

Working from memory is what produces the gaps above: deburring, inspection and packing are real operations that nobody thinks of as operations.

Cost one part, not one lot

Enter everything per part. Where a cost is genuinely per lot — setup, first article, a minimum charge from a plater — divide it by the lot size and **record the lot size you used**.

The ten categories, in the order the part moves

1. Material — stock issued, not part weight

Take the weight or length of stock **issued from stores**, not the weight of the finished part. Everything you machined away was bought and paid for.

Chips have a resale value and it is not zero — but use the price on the scrap dealer's weigh ticket, not the price you paid for the bar. Entering the difference twice, once as reduced stock and once as recovery, makes the sheet look good in a way that is simply wrong.

2. Machine time — the machine hour rate

Machine hours per part times the hourly rate for **that** machine. A five-axis machining center and a manual bandsaw do not share a rate, and averaging them across the shop hides exactly the differences you would want to act on.

Include setup, divided by the lot size. A short run where setup dominates is a genuinely more expensive part, and the sheet should say so.

3. Labor — the operator's time

Attended time per part. If one operator runs several machines, divide accordingly — this is normal and it should show up as lower labor per part, which is the whole reason shops do it.

Keep inspection and deburring time separate from run time if you can. They behave differently when volume changes, and merging them removes your ability to see which one is growing.

4. Tooling — inserts and cutters wear per part

Cost of the tool divided by the number of parts it produces before it is changed. That is the whole calculation, and it needs no new measurement system — see the dedicated guide for how to get the number from records you already keep.

5. Scrap — parts lost along the way

A part scrapped at final inspection has consumed everything up to that point, not just its material. Where you can, record **which operation** the loss happened at; where you cannot, record a total and say it is a total.

6. Rework — saved, at a cost

Extra time and extra tooling to bring a part back into tolerance. If your shop reworks nothing, enter **zero** rather than leaving the field empty — zero means you considered it, empty means nobody knows.

7. Outside processing — work that leaves the building

Heat treat, plating, anodizing, grinding, coating. Use the vendor's price for the lot divided by the pieces in the lot, and include **freight both ways** — it is small per part and it is not zero.

If the vendor scraps parts and the contract leaves you carrying it, that belongs here too.

8. Packaging

Boxes, dividers, bags, rust preventative, pallets. Count what one part actually consumes — a box holding many parts contributes a fraction of a box.

9. Freight — getting it to the customer

Cost of a shipment divided by the parts in it. Where you ship on a customer's account and it costs you nothing, enter zero and note why.

10. Shop overhead — the layer over everything

Floor space, lighting, supervision, maintenance, consumables too small to track individually. Whatever basis you allocate on — machine hours is usual for a machine shop — **use the same basis every time**, or your own costings stop being comparable to each other.

Ten things to check before you publish

1. Material is stock issued, not finished part weight.
2. Chip recovery uses the scrap dealer's price, and is not subtracted twice.
3. Machine rate is the rate for that machine, not a shop average.
4. Setup is included and the lot size is written down.
5. Tooling is cost divided by parts per tool change, not a guess.
6. Scrap reflects value lost at the operation where it was lost.
7. Rework is zero, not blank, if you do not rework.
8. Outside processing includes freight both ways.
9. Electricity appears exactly once.
10. Overhead uses the same basis as your other costings.

That list is worth keeping even if you never publish the costing. Every item on it is a way the number comes out lower than reality, which is the direction that costs a shop money when quoting.