Material estimating can be simple to complex depending on the particular job you are estimating. Raw material is a commodity which could include metal sheets, wood, bars, plastic, plates, block of metal, etc. These items are purchased from a supplier and are usually priced at a per unit weight price.
A few examples
1. When the raw material is priced as a per unit weight the estimated costs at the high level is
( Part Weight ) * (Price Per Unit Weight)
2. When the raw material is priced per unit. An example would be the supplier would price a 48 x 120 piece of plywood at $22.00
(Units Required) * (Price Per Unit)
3. The raw material may be priced per linear length, example wood be a tube would be priced at $2.00 per linear foot.
(Part Length) * (Linear Length Price)
The supplier would potentially have a Price Per Unit Weight, Price Per Unit or Linear Length Price that would fluctuate based on the quantity being purchased. In this case the supplier would give prices as shown in the example
Weight Price Per LB
As shown above you need to know the Part Weight, Unit Required and or Part Length. Next you need to know the price that will be charged from the supplier and you will have the cost.
In the next blog entry the calculation of Part Weight will be discussed.
MIE Solutions provides software resources to help you manage your direct and indirect labor throughout the product life cycle from quoting and estimating, job costing to invoicing.