Average Fixed Cost Formula, Cost Per Unit Calculator, and Operating Leverage
Use the average fixed cost formula (AFC = TFC / Q) and unit cost calculator to see why an automated line costs more per pack than a semi-automatic line at 45% utilization.
Economics of Work, Production & Automation
Cost models and explainers on production, automation and supply chains. Each one shows its arithmetic and says where its answer stops holding.
Reading guide
The articles sit under three topics, and each topic has a reading guide. Take the guide if you want the pieces in a sensible order, or use the full list below if you already know what you need.
The articles are built the same way, so you can find what you need quickly. Each opens with the decision it helps with and gives the answer right away, before any detail. Formulas sit in plain text blocks you can copy into a spreadsheet.
The worked examples show the arithmetic so you can check it. Replace the inputs with the plant’s own quotes and measured rates before acting on a result. The last section of each piece lists what the model leaves out and when its conclusion stops applying.
Replace the example numbers with your own before you act on any result. The editorial policy explains how the pieces are written and checked.
If you own the budget and are deciding whether to buy, start with Automation Payback, ROI and TCO to see what each metric tells you. Then read The True Installed Cost of Packaging Automation, so the investment figure is complete before you calculate anything.
If you run operations and want more output, begin with Why Faster Machines Do Not Always Increase Line Output, which helps you find the stage that limits the line. Follow it with Small Batches and Frequent Changeovers to see what changeovers take from that output.
If you’re in finance or purchasing and comparing quotes, Comparing Packaging Machinery Quotes on a Like-for-Like Basis puts the offers on one scope. If any offer crosses a border, add Imported Equipment Costs Beyond the Factory Price.
Articles link to each other where one result feeds another, and each ends with three suggestions for what to read next. The same case numbers recur across several pieces, so a figure in one article can usually be traced to its source in another.
Calculators and data pages are in preparation and will be published only after testing.
Use the average fixed cost formula (AFC = TFC / Q) and unit cost calculator to see why an automated line costs more per pack than a semi-automatic line at 45% utilization.
Use the overall equipment effectiveness formula (OEE = Availability × Performance × Quality) and financial calculator to test whether a +5% OEE gain saves cash or merely creates idle time.
Compare simple ROI calculation in Excel against NPV, XNPV, IRR, XIRR, and MIRR formulas when equipment CapEx has milestone deposits, Q1 ramp-up scrap, and a Year 5 overhaul.
Build a manufacturing-cost statement from raw-material usage, labor, overhead and WIP, then reconcile COGM to costed finished-goods receipts.
Model packaging materials, piecework, overtime and energy separately, with assumed examples showing where one variable rate stops working.
Compare national capacity utilization, plant output, machine hours and OEE by their denominators, with a labeled plant example and a records checklist.
Apply one manufacturing overhead pool on labor hours and again on machine hours. Rates and dollars stay blank until your records fill them.
Separate net working capital and an operating working-capital figure from the monthly cash gap of one manufacturing order. Plant amounts stay blank.
Compare avoidable make cost with purchase-and-delivery cost, then add only the contribution of orders the same hours could ship.
A five-year Excel sheet for equipment cash that changes by year, with a negative overhaul year, cumulative recovery, and NPV.
Calculate FC, VC, TC, AFC and AVC with a worked production-line example, separate total and unit-cost charts, and copyable Excel formulas.
A practical guide to calculating Overall Equipment Effectiveness (OEE) on packaging lines, diagnosing the six big losses, and avoiding bottleneck averaging errors.
Three ways to value an hour of unplanned downtime (lost revenue, lost contribution, recovery cost), when each applies, and a worked 90-minute stop.
When a contract packer costs less than your own line, when it does not, and the non-price factors that decide the close cases, with a worked break-even.
A review template that compares an automation business case with 90 days of actual results, recalculates payback, and records lessons for the next investment.
A volume-based cost model that puts manual, semi-automatic and fully automatic packaging on one basis, with the crossover volumes worked out and checked.
A model linking batch size, changeover time and run time to good packs and cost per good pack, with a worked shift example and a simple changeover log.
How to put rollstock and premade pouches on one cost basis: material, waste, labor, equipment and order structure, with two worked scenarios and a break-even formula.
A method and comparison table that put packaging machinery quotes on the same scope, so the lowest headline price is not mistaken for the lowest cost.
Payback, ROI and TCO answer three different questions. One worked automation case run through all three, with what each metric leaves out.