Material Cost

Material cost refers to the net material cost required by the drawings, calculated as material volume * material density * material unit price. The primary cost here is the material cost, and with this, a simple quotation can be made using a “materials plus labor” approach. For example, if the material cost is one dollar, using a “materials plus labor” quotation would be two dollars.

The “materials plus labor” approach depends on the complexity of the sheet metal part being processed. Generally, when calculating the sheet metal material cost, a wastage rate of 5%-10% should be included.

Standard Component Cost

This refers to the required standard component cost as per the drawings (mainly rivet nuts and rivet bolts). Typically, sheet metal factories calculate this at 0.4 yuan per piece (including processing costs).

Process Fabrication Cost

This refers to the processing cost required for each process to produce the product.

a. CNC Cutting

Its cost composition = equipment depreciation + labor cost + auxiliary materials

Equipment Depreciation:

Equipment depreciation is calculated over 5 years, with 12 months per year, 22 days per month, and 8 hours per day.

For example, for equipment costing 2 million, the hourly equipment depreciation = 2,000,000/5/12/22/8 = 189.4 yuan/hour

Labor Cost:

Each CNC machine requires 3 technicians to operate. The average monthly salary for each technician is 1800 yuan. With 22 working days per month and 8 hours per day, the cost per hour is 1800*3/22/8 = 31 yuan/hour

Consumables Cost:

Refers to auxiliary production materials such as lubricants and volatile liquids required for equipment operation. The approximate monthly cost for each piece of equipment is about 1000 yuan. Based on 22 working days per month, 8 hours per day, the cost per hour is calculated as 1000/22/8=5.68 yuan/hour.

According to the customary pricing in the sheet metal factory:

1. CNC cutting:

Priced according to the cutting technique—0.08 yuan per cut for cutting 30mm with one stroke. For example, for a 60mm square sheet metal, the CNC cost is calculated as 604/300.08=0.64 yuan.

2. Laser cutting:

Priced according to the length—typically 4 yuan per meter. For example, for a 60mm square sheet metal, the cost would be 604/10004=0.96 yuan.

b.Bending:

Its cost composition includes equipment depreciation, labor cost, and auxiliary materials equipment depreciation.

Equipment depreciation

Equipment depreciation is calculated over 5 years, with 12 months per year, 22 working days per month, and 8 hours per day. For example, for a 500,000 yuan equipment, the equipment depreciation per minute is calculated as 50*10000/5/12/22/8/60=0.79 yuan per minute. Bending time typically ranges from 10 seconds to 100 seconds, hence the equipment depreciation per bend is 0.13-1.3 yuan per bend.

Labor cost:

Each piece of equipment requires one technician to operate. The average monthly salary for each technician is 1800 yuan. With 22 working days per month and 8 hours per day, the cost per minute is calculated as 1800/22/8/60=0.17 yuan per minute. On average, one technician can complete 1-2 bends per minute. Therefore, the labor cost per bend is 0.08-0.17 yuan per bend.

Consumables cost:

The monthly consumables cost for each bending machine is 600 yuan. Based on 22 working days per month and 8 hours per day, the hourly cost is calculated as 600/22/8/60=0.06 yuan per bend.

Pricing for bending in the sheet metal factory: for lengths greater than 1 meter, the cost is 1 yuan per bend, and for lengths less than 1 meter, the cost is 0.5 yuan per bend.

Surface Treatment

Outsourced services are based on purchase prices (e.g., electroplating, oxidation, spraying, and silk-screening).

Composition of spraying costs:

Spraying Cost = Powder Material Cost + Labor Cost + Auxiliary Material Cost + Equipment Depreciation

Powder material cost:

The calculation is generally based on square meters, with powder prices ranging from 25-60 yuan per kilogram (mainly depending on customer requirements). Generally, one kilogram of powder can cover 4-5 square meters.

Powder Material Cost = 6-15 yuan per square meter

Labor cost:

The spray line has a total of 15 workers, each earning 1200 yuan per month. They work 22 days per month, 8 hours per day, and can spray 30 square meters per hour. The labor cost is calculated as follows: 15*1200/22/8/30=3.4 yuan/m2.

The auxiliary material cost:

The auxiliary material cost mainly refers to the fuel expenses for the pretreatment solution and the curing oven. It amounts to 50,000 yuan per month, considering 22 working days, 8 hours per day, and the ability to spray 30 square meters per hour. The auxiliary material cost is calculated as 9.47 yuan per square meter.

Equipment depreciation:

The equipment depreciation cost is calculated based on an investment of 1 million yuan for the spray line, depreciated over 5 years, with operations running every December, 22 days per month, 8 hours per day, and the ability to spray 30 square meters per hour. The equipment depreciation cost is calculated as 3.16 yuan per square meter. Overall, the total spray cost ranges from 22 to 32 yuan per square meter.

If partial protection spray coating is required, the cost will be higher. The price of zinc electroplating is generally around 2 yuan per kilogram.

Administrative Costs

Administrative costs consist of two parts: factory rent, utilities, and financial expenses.

Factory Rent and Utilities:

The monthly factory rent and utilities amount to 150,000 yuan. Considering a monthly output value of 4 million yuan, the proportion of factory rent and utilities to the output value is calculated as 15/400 = 3.75%.

Financial Expenses:

Due to the mismatch in the accounts receivable and accounts payable periods (we pay cash for materials, while customers settle their accounts on a 60-day basis), we need to hold funds for at least 3 months. Based on bank interest rates of 1.25-1.5%, the administrative expenses should account for approximately 5% of the total sales price.

Profit

Taking into account the company’s long-term development and better service for customers, the profit margin is generally set at 10%-15%.