Scrap Cost Calculator
Material and labor losses from scrap and rework.
Annual Scrap Cost
$120,000.00
Scrapped Units / mo
500
Material Loss / mo
$4,000.00
Labor Loss / mo
$6,000.00
Monthly Savings
$6,000.00
Annual Savings
$72,000.00
Reducing scrap from 5% to 2% is a 60% reduction in defects, saving 300 units per month.
Annual Scrap Cost = Scrapped Units × (Material + Labor) × 12
Total Units Per Month is everything the process started, because scrap came out of those starts rather than out of the good units alone. Current Scrap Rate is the share of starts you could neither sell nor rework. Material Cost is the material consumed in a scrapped unit, net of anything you genuinely sell back. Labor Cost is the trap: it is the labour and machine time already converted into the unit at the point it failed, which is sunk and unrecoverable, so a part scrapped at final inspection costs far more than one caught at the first operation. Set Target Scrap Rate to a rate the process has actually held.
Why is the scrapped unit count lower than I expected?
Scrapped units are rounded down to whole parts, so 7,500 units at a 2.5 percent rate reads 187, not 187.5. The other common cause is the volume itself: Total Units Per Month means units started. Enter good units shipped instead and every cost on the page comes out understated.
Does rework count as scrap in this calculation?
No. The calculation charges every scrapped unit the full material cost plus the full labour cost, and a reworked unit keeps its material. To cost rework, run the page a second time with Material Cost at zero and Labor Cost set to the rework time only, then add the two annual totals yourself.
What counts as an acceptable scrap rate?
This page sets no benchmark, and a borrowed average would mislead you: a rate that is routine in deep draw stamping would close a precision machine shop. Use Target Scrap Rate as your own benchmark, set it from the best month the process has genuinely run, and judge movement against your own history.
How does scrap cost differ from cost of poor quality?
Scrap cost is one line inside cost of poor quality. This page counts the material and labour destroyed in units you discarded. Cost of poor quality also carries inspection, rework, sorting, warranty, returns, expedited freight and the capacity spent making the same part twice, so the real total runs well above this one.
What should I do with the annual scrap cost?
Take it to whoever approves the fix. Annual Savings is the gap between your Current Scrap Rate and Target Scrap Rate, which is the budget a fixture, a gauge, a dryer or an added in process check has to beat. Then split the total by part number and operation so the money lands where the scrap is.
Track Scrap in Real Time and Catch Defects Earlier.
WorkCell monitors scrap rates by machine, operator, and part number - so you can identify root causes fast and stop bleeding money on defects.