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Step1
Calculate an average wage rate per hour for your manufacturing workforce. To do so, add all the hourly wages together and average them. Then, add all the payroll tax you pay for these employees and average this figure. Next, average the benefits you pay for your manufacturing labors. Add these figures -- the hourly wage average, the payroll tax average and the benefits average -- together to determine your workforce's average wage rate per hour .
Step2Calculate average labor hours per unit. This is best done by observation. Find the average amount of time it takes a laborer to produce a unit. Add an allowance for breaks and personal needs. Add in some time for machine setup and machine downtime. The resulting figure is your average labor hours per unit.
Step3Multiply your average labor hours per unit by the average wage rate per hour. This is your average labor cost per unit. Note that it is an average, and actual unit labor costs may be above and below the average.
Step4To make a standard labor cost card for each unit, write down your calculations in detail. That way, if machine downtime increases, or average wages increase, you can make adjustments and recalculate.
Direct Labour Cost per Unit = total direct labour cost / total units produced.
Its simple just take the total production quantity(A) for the month and and total related labour charges for that particular porduct for the month(B) and devide that by the production output quantity
This question should be answered by the Financial Planning expert as for as HR is concern we can only calculate the minimum wages of labor set by the Governemnt.
Labour Cost per unit is calculate by the foloowing formula
Total labour cost for a specific period / units of production for the period
where
units production in a specific period = closing units+ units added into process in the current period -opening units
In general you have to calculate it as follows: (monthly Wages for direct labors who work on the machine) / (quantity produced).
Wages: include all salary and benifits with insurance and housing, transportation ... ets)
Direct laborers: Direct laborers are workers who directly perform work on the product being produced. For example, in an automotive factory, the person puts the wheels on the car is a direct laborer, but the person who sweeps the floors is not.
Answer is simple but application is difficult. The formula is:(Total fixed cost + Total Variable Cost) / Total number of units producedBut in practical we have to understand that fixed cost is for example building rents, variable costs involve utilities, labor cost, material cost, maintenance of machines etc. Now second question is how many types of variable costs. One is Direct variable cost that is directly associated with the production of the product like raw material cost, freight of that material, labor directly involved in production of the material or finished goods. The costs related to finance, HR, IT is indirect variable cost. Final thing is labor cost does not mean their salaries only rather understanding the full loaded cost like if we are providing vehicles to pick and drop labor from any place to plant and back, that cost will be part of labor cost and so does other benefits.
Ms. Samar this is very technical question and i would suggest to ask someone for Costing background as they calculates and workout on various cost. Well in general, what i had studies during finance and through experience, however, we calculate labor cost as the minimum wage set by government and divide that cost with Number of Working days and this leads to Per Day Wage which can be further divided by08 (hours) to have Per Hour Wage Rate.
Well, as i mentioned to have this reply from Costing & Budgeting expert as more authentic one.
Total labour cost for a given period (Direct and indirect)/ No. of units produced = labour cost per unit production
average hourly wage rate * average hours to produce one unit = average laour cost per unit production
this is just a rough idea, the detailed calculation may be somwhat somplex. I hope i ahve been helpful.
Divide one hour by the number of times the operation can be performed in that hour.60 units per hour:1/60=0.0167 standard hourCost of the operation is the standard hour x number of workers x labor rate. For this example, with one person:0.0167 x1 x $18.50 = $0.309 per part
Calculated thr. : Labor Cost per unit = Total Labor Cost / Total Number of Units Produced
For determining the labour cost per unit production, we required to know the time consumption of per unit first.
Per Unit Labor Cost = Total Labor Cost / Total Number of Units Produced
*Labor Cost can be determined by the time card of a labor for the production of a unit.
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