Understand and Control Your Product Costs with a Bill of Materials (BOM)
The Cost Product BOM (Bill of Materials) Excel Spreadsheet is an essential tool for calculating and analyzing the expected cost of manufacturing a product.
It allows you to include all direct resources consumed during production — such as raw materials, labor hours, energy, and machine time — to determine a reliable target or budgeted cost.
This practical Excel example is ideal for manufacturing companies, cost analysts, and controllers who want to understand how every component contributes to the total cost of a finished product.
What Is a Cost Product BOM?
A BOM (Bill of Materials) is a structured list of all materials, components, and resources required to produce a specific product.
Think of it as a “recipe” — each ingredient and activity contributes to the final cost.
In this Excel example, the Cost Product BOM is divided into two main sections:
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Raw Materials – lists components, quantities, and unit costs.
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Working Hours – records direct labor or machine time and associated cost per hour.
Each component’s total cost and the overall product cost are automatically calculated.
How the Cost Product BOM Excel Template Works
The spreadsheet includes the essential elements to estimate the total production cost:
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Component name
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Unit of measure
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Quantity used
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Unit cost
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Total cost per component
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Total BOM (product) cost
The result is the expected or budgeted cost per product, which can later be used to:
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Set sales prices by applying a desired margin or markup
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Estimate profitability by product or family
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Compare budgeted vs. actual production costs
This Excel BOM model provides a solid foundation for cost control and pricing decisions.
Why Actual Manufacturing Costs May Differ from the BOM
Although the BOM defines a target cost, real production may vary due to multiple factors:
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Purchase Cost Variation
– Supplier prices can fluctuate due to market conditions, transport, or volume discounts. -
Quantity Variance
– Actual material consumption may differ slightly from standard quantities, depending on production efficiency or product nature. -
Component Substitution
– A shortage or stock-out may require using alternative materials, altering costs. -
Working Time Variation
– Labor time is rarely constant. Differences in operator speed, training, or equipment performance can impact total cost.
By comparing real vs. budgeted costs, companies can identify inefficiencies, optimize procurement, and adjust product pricing or process parameters accordingly.
Why Use This Excel Template
✅ Free and easy-to-use example for understanding product cost structures
✅ Helps calculate target manufacturing costs quickly
✅ Divides costs into materials and labor for clarity
✅ Ideal for manufacturing, food production, and industrial processes
✅ Enables comparison between planned and actual production costs
✅ 100% open and editable spreadsheet
Download the Cost Product BOM Example Excel Template
Gain visibility over your production costs and improve your pricing accuracy.
Download the Free Cost Product BOM Excel Spreadsheet, simulate your product recipes, and optimize your cost structure.
👉 Get it now – free, editable, and ready to use in Excel.
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