Enter the total hours worked, average hourly rate, taxes, and benefits paid to determine the direct labor costs.

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## Direct Labor Costs Formula

The following formula is used to calculate direct labor costs.

DLC = TH * HR + T + B

- Where DLC is the direct labor costs
- TH is the total hours worked
- HR is the hourly rate
- T is the taxes paid during the time period
- B are the benefits paid during the time period

## Direct Labor Costs Definition

Direct labor costs are defined as a cost of labor that goes directly into the production or manufacturing of a good. These include the wages, taxes, and benefits paid to the employees that directly worked on the product over a time period.

## Direct Labor Costs Example

How to calculate direct labor costs?

**First, determine the hours worked and rate.**Determine the total number of hours and hourly rate for those working on the good.

**Next, determine the taxes and benefits.**Calculate the taxes and benefits paid to the employees during the same time period. For example, if employees get $5,000.00 paid out over the year in taxes and benefits, and the workers spent one month working on the product, then the taxes and benefits would be 5000/12 = $416.66.

**Finally, calculate the direct labor costs.**Calculate the direct labor costs using the equation above.