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Please Help - Manufacturing gaskets material cost breakdown

Please Help - Manufacturing gaskets material cost breakdown

(OP)
Hello,
I was hoping to get a little bit of help with figuring out cost calculations during the manufacturing process of Gaskets.
I have a program that estimates the cost to produce a part then breaks it down into total material & labor cost.

Here’s what I know: (Everything is in inches)

Total Sell Price of material / Total Sq.In. needed = Cost per sq.in.
Cost per sq in. x sq.in per each = Material Cost per each

What I can’t figure out is how the total sell price was calculated. I’m unfamiliar manufacturing gaskets, and feel that I’m missing something in the setup process.
This is the problem I’m working with.
SETUP:
Labor Rate Per Hour: $50.00
Parts Per Hour (Cutting Ratio): 0075
Cutting Allowance (Spacing): 0.15
Thickness: 1/16

MATERIAL:
316L Stainless
Width: 48in
Length: 96in
Thick: 1/8
Cost per sq.in: $0.1111
Cost per unit: $512.10

DIE CUT GASKET TO MAKE:
Shape: Circle
Outer Dia: 2.25
Inner Dia: 1.062
QTY: 100 Pieces

NOTE: Single Part produced per cut
Parts Per Hour 132
Total Time: 0.76 Hours

NOTE: No Credit Allowed for Centers

Program Generated Results:
Material Cost Per Each : $0.6399
Labor Cost Per Each: $0.3788
Per Gasket Cost: $1.187

Here’s what I calculated:
SqIn Per Part: 3.09
Total Sq. In Needed: 309.027
Cost Per Sq. In: .207
Total Sell Price: 63.99
Cost: per each: $0.639

I was able to find the Total Sell Price ($63.99) through reversing the Cost per sq. in.
Again, I’m not familiar with manufacturing processes, and am not the best at math….so my calculations could be way off.

If anyone can help, I would be extremely grateful!!

Thanks - Nicole

RE: Please Help - Manufacturing gaskets material cost breakdown

No matter what shape the gasket is, you need to cut a circumscribed rectangle from a larger rectangular sheet to make a gasket. That rectangle is the cost basis. All the unused material within goes to waste. Also wasted is the material where the gasket rectangles don't quite fill the entire gasket material sheet, sort of a quantization error.

( Some gasket shapes can be nested to save material, but in the general case it's not possible. )

Note also that no law anywhere forces you to compute the sell price from your costs; it can be entirely arbitrary. The only reason to compute costs at all is to check that you are not losing money.

Mike Halloran
Pembroke Pines, FL, USA

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