CALCULATING COSTS OF A SHRINK FILM PACKAGE

Although there are several methods of calculating the costs involved in a shrink package, the following method is suggested as the least complex and the easiest to review with the prospect with whom you are working on a project.  Labor rate per hour is best obtained from the prospect, a figure of between $6.00 and $8.00 per hour is usually representative of the entry level labor assigned to a shrink packaging system.  Current material costs should also be obtained from the prospect if a comparison between current costs and proposed shrink package is to be done.  Material costs for the shrink package will calculate using the price for film which you will quote the prospect.

Labor

                                      350 minutes per 8 hour shift

                          People Required x Hourly Labor Rate = $/Hour

                   Packaging/Minute x 50 Minutes/Hour = Packages/Hour

                               $/Hour ÷ Packages/Hour = $/Package

                                                     Material

                  Feet/Roll of Film ÷ Package Cutoff Length = Packages/Roll

                                   $/Roll ÷ Packages/Hour = $/Package

                                                       Total

                        $/Package Labor ÷ $/Package Material = $/Package

Annual packaging costs can be calculated by multiplying the cost per package times the annual production (if known) of by multiplying the cost per package times the number of shifts per day, times 220 productions per year to arrive at an annual total.