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Scrap Rate Cost Calculator

Enter units produced, units rejected and unit cost to find your scrap rate and its cost.

How it is calculated

The tool needs three numbers: produced (all units made in the run), rejected (units scrapped) and cost (cost to make one unit). It returns four results: scrap rate = rejected ÷ produced × 100, scrap cost = rejected × cost, good units = produced − rejected, and effective cost per good unit = produced × cost ÷ good units. The last figure spreads the whole run's cost over the good units only. If you enter more rejected units than produced, the tool caps rejected at produced. When every unit is rejected, good units are 0 and the effective cost is shown as $0.00 rather than an infinite value, so read it as not applicable. Produced must be above zero and the other two cannot be negative. Money is shown in dollars.

Worked example

A run makes 5000 units, 175 are rejected, and each unit costs 4.20 to make. Scrap rate: 175 ÷ 5000 × 100 = 3.50%. Scrap cost: 175 × 4.20 = $735.00. Good units: 5000 − 175 = 4,825. The whole run cost 5000 × 4.20 = $21,000, and dividing that by the 4,825 good units gives an effective cost of $4.35 per good unit, about 15 cents above the nominal 4.20.

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Common mistakes

  • Entering the good units in the produced field; produced must be the total before inspection, otherwise the rate comes out too high.
  • Leaving out reworked units or counting them as scrap without deciding how they are treated; the tool counts only what you enter as rejected.
  • Using the selling price instead of the cost to make one unit, which overstates the scrap cost.
  • Comparing the scrap cost with the effective cost per good unit; the first is the loss on rejects, the second is the price each saleable unit really carries.
  • Reading $0.00 effective cost as good news when 100% of the units were rejected.

About this calculator

The scrap rate in manufacturing is the share of units produced that fail quality inspection and get rejected — calculated as rejected units ÷ total units produced — and it's a core metric in Lean and Six Sigma quality programs because it directly measures how much of a production run is wasted material and labor. Multiplying rejected units by the unit cost gives the raw scrap cost, but the more revealing figure is the effective cost per good unit, which spreads that waste across only the units that actually passed inspection.

This calculator takes units produced, units rejected, and unit cost, then returns the scrap rate, total scrap cost, and the effective cost per good unit — the number that shows how much scrap is really inflating your per-unit economics. Manufacturing engineers, plant quality managers, and cost accountants use it to track process yield over time and to justify investment in defect reduction by putting a dollar figure on the current scrap rate.

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Comments (1)

  • Editorial team

    Notice the gap between unit cost and the effective cost per good unit. With the default run of 1,000 pieces at 4.50 each and 25 rejected, each good piece effectively costs 4.62, because the scrapped pieces are paid for by the good ones. The tool treats scrap as a total loss at full unit cost, so any rework or resale value would reduce the real figure. Do you rework or sell your rejects?

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