Most Nigerian manufacturers we visit calculate cost as material + labour. That's wrong on average by 40%. Here's everything you should be including:
Direct material (correct)
Raw inputs at landed cost (purchase + freight + customs).
Direct labour (correct)
Hourly wage × minutes per unit. Include benefits and statutory contributions.
What most manufacturers miss
1. Machine depreciation per unit
Your N50m extruder will run ~7 years — that's about N1.5/hour of depreciation. Over a 60-second-per-unit run, you owe each unit N0.025 of machine cost. Sounds nothing — multiply by 1.5m units a year.
2. Power and diesel
Diesel cost per unit = (litres burned per shift ÷ units produced per shift) × current diesel price. The diesel price part changes weekly — recompute monthly.
3. Quality rejects (yield)
If 4% of output fails QC, your "good unit" cost is the total cost ÷ 96. Often 4-7% in Nigerian manufacturing.
4. Setup & changeover
If a 30-minute changeover precedes a 1000-unit run, that's 1.8 seconds of "setup labour" per unit. Track it.
5. Indirect labour
Supervisors, QC inspectors, security, cleaners. Allocate by floor space or by output volume.
Setup in Supreme ERP
Use BOMs with byproducts and yield. Use cost accounting per work centre. Run "product margin per SKU per customer" report monthly. The reports are built in.