What a scrapped part actually costs you.
Your system already values a scrap transaction at standard cost, which covers the material, the labor and the overhead in the part. What it does not cover is everything that happens after the part fails. This sheet prices that.
True cost of scrap and rework, per month
$0
What your system books it at: $0
- Scrap at standard cost, already on your books$0
- Labor spent reworking what was saved$0
- Sorting and containment timeEst$0
- Overtime premium on making the replacement$0
Fill in the fields below and the comparison will appear here.
01 The part you are looking at
02 Your labor rate
03 What happens after the part fails
04 Replacing the part
This sheet prices one part, not the whole plant. A $35 part and a $400 part blended together produce a number that describes neither, so the tool deliberately does not average them. If you want a picture across the plant, run it again for another part and keep both sheets. Working out what the whole operation is losing is what the audit is for.
How this is calculated, and what it leaves out
Where it starts. Standard cost, the figure your ERP already puts on a scrap transaction. For a component that is its own material, labor and overhead. For an assembly the standard already rolls up the components and the build labor, so one number covers either case and nothing gets counted twice.
What it adds. Only what standard cost cannot see. Labor spent reworking the parts you saved, sorting and containment time, and the premium paid to replace what was scrapped.
On that premium. A constrained plant rarely loses the order. It works the Saturday and the customer never knows. So the cost is not a lost sale, it is the same hours bought again at overtime instead of straight time. Only the premium counts, because the straight time portion is already sitting inside standard cost. Answer no when there are open hours to absorb the remake, and the line goes to zero, which is correct.
One field is a judgement, and it says so. Sorting and containment time rarely has a labor code behind it, so it is marked as an estimate on the sheet and in the result. Everything else here traces to a record you already hold. Knowing which of your numbers are measured and which are estimated is the whole discipline, and it starts here rather than in a report.
One thing that cuts the other way. Standard cost carries a share of overhead you pay whether the part is good or scrapped, so the booked figure slightly overstates the cash actually lost. This sheet adds to standard cost rather than correcting it, which keeps the result conservative where it matters and easy to reconcile against what your system already told you.
What it deliberately leaves out. Disposal and haul away, customer returns and warranty claims, expediting a replacement shipment, administrative time, and the cost of a delivery date missed because of rework. All real, none of them in this number.
Overlap warning. If sorting and containment hours already appear in your downtime log, the downtime calculator counts them too. Do not add the two results together without checking.
So the figure is a floor rather than a ceiling. It is built to survive an argument with a controller, not to be impressive.