Job Costing Calculator

Job costing tracks costs for a specific job, order, or batch. Each job gets its own cost record — you know exactly what it cost to produce Job #2047. This approach is used in industries where every job is unique or custom: machine shops, fabrication, toolmaking, construction, and low-volume contract manufacturing.

Process costing averages costs across an entire production period and divides by the number of units produced. It's used in high-volume, continuous-flow production where every unit is identical: oil refining, food processing, and large-scale commodity production.

For most job shops and contract manufacturers, job costing is the right approach because it lets you compare actual job cost against your original quote, identify which job types are profitable, and adjust pricing on future jobs based on real data.

The machine rate is the total cost of owning and operating a piece of equipment, expressed as cost per hour. It is calculated by adding up all annual costs associated with the machine, then dividing by the number of productive hours the machine runs per year.

The main components of a machine rate are: depreciation (equipment price ÷ useful life), maintenance and repair, tooling amortization, energy/utilities, and insurance or property tax apportioned to the machine.

Example: A CNC machine purchased for $180,000 with a 10-year life, $8,000/year maintenance, $4,000/year tooling, and $5,000/year energy running 1,800 hrs/year: Rate = ($18,000 + $8,000 + $4,000 + $5,000) ÷ 1,800 = $19.44/hr base, before overhead allocation.

Always use the fully burdened labor rate for job costing, not the base wage. The burdened rate is the true cost to your business of employing that worker for one hour.

Burden typically includes: payroll taxes (social security, unemployment insurance), health insurance and other benefits, paid time off (spread over productive hours), workers' compensation insurance, and retirement contributions.

As a rule of thumb, the burdened rate is typically 30–50% above base wage. If your operator earns $20/hr base, the burdened rate is likely $26–$30/hr. Using base wage instead will consistently understate your labor cost and erode your margins on every job.

The overhead rate represents all indirect factory costs that support production but can't be directly assigned to one job: facility rent, utilities not separately metered per machine, supervisory salaries, general insurance, and indirect supplies.

To calculate: add up all indirect factory costs for a year, then divide by your total direct costs for the same period. Express as a percentage. Example: $200,000/year in overhead ÷ $800,000 in direct costs = 25% overhead rate. For every $1 of direct cost in a job, you allocate $0.25 in overhead.

Typical ranges: small job shop 20–35%, larger automated facility 15–25%, labor-intensive assembly 25–45%. Review and update annually — as your revenue grows, overhead as a percentage of direct costs often falls.

Gross margin targets vary by industry, job type, and competitive environment. As a general guide: standard contract machining/fabrication 25–40%; high-precision/specialty work 35–55%; high-volume commodity work 15–25%; tooling and mold making 30–50%.

Remember that gross margin must also cover your non-factory costs (sales, admin, finance) and leave enough net profit for reinvestment and owner returns. Track gross margin per job type over time to identify which work is genuinely profitable, not just keeping the machines busy.