Direct Labor Cost Calculator
Cost labour hours at your own rate, with any overtime premium separate.
What this calculator does
Hours multiplied by the entered rate, with the overtime premium shown as its own line so the base rate is never quietly inflated.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Labour hours per unit
- — number value.
- Units produced
- — number value.
- Labour cost per hour
- — Wage plus whatever payroll cost you include. Nothing is assumed..
- Overtime hours worked (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Overtime premium per hour (optional)
- — Optional component. Leave at 0 to exclude it from the result. The extra paid above the normal rate, not the whole overtime rate..
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Direct labour cost = (Hours per unit × Units × Labour rate) + (Overtime hours × Overtime premium)
Worked example
0.75 hours per unit across 1,200 units
Hours worked at your own labour cost per hour, with any overtime premium added separately.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: Rice University — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
Hours required at the user's own hourly cost, with any overtime premium added separately rather than folded into the rate.
The question it answers: What does the material, the labour, the overhead and an hour on the machine cost us?
The formula
Direct labour cost = (Hours per unit × Units × Labour rate) + (Overtime hours × Overtime premium)
- h — Hours per unit
- (hour). Labour each unit needs.
- u — Units produced
- (count). Units made.
- r — Labour rate
- (currency). The user's own cost per hour, including whatever payroll cost they choose to include.
- H — Overtime hours
- (hour). Optional.
- P — Overtime premium
- (currency). Optional. The extra paid above the normal rate, per hour.
Units: Currency; hours; counts.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
Hours multiplied by the entered rate, with the overtime premium shown as its own line so the base rate is never quietly inflated.
Assumptions built into the result
- Industry: Every cost, rate and standard is the figure the user entered, in the currency they chose; no exchange rate is applied.
- Mathematical: Costs and output cover the same period or the same job.
Figures this calculator will never guess for you
- No industry average, benchmark or target cost is supplied.
- No standard rate, wage or material price is assumed on the user's behalf.
- Optional components are excluded from the result when left at zero.
- No wage, payroll burden or overtime multiplier is assumed.
Limitations
- Arithmetic over the figures entered — it cannot tell whether the costs, standards or allowances behind them are right.
- A target cost, an industry benchmark and the organisation's own standard are different things; only the figures entered are used.
- One labour rate is applied; a run worked by grades on different rates must be split.
Source and version
- Standard or reference
- Managerial accounting — job order and process costing — OpenStax (Rice University) (Principles of Accounting, Volume 2: Managerial Accounting (OpenStax) — job cost is direct materials plus direct labour plus overhead applied at a predetermined rate; unit cost is total production cost divided by the units produced.)
- Published source
- Rice University — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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