Enter the total labor cost and the total units produced into the calculator to determine the labor cost per unit. This calculator helps in understanding the labor cost involved in producing a single unit of product.
Labor Cost Per Unit Formula
The following formula is used to calculate the labor cost per unit.
LCU = TLC / TU
Variables:
- LCU is the labor cost per unit ($)
- TLC is the total labor cost ($)
- TU is the total units produced
To calculate the labor cost per unit, divide the total labor cost by the total units produced.
What is Labor Cost Per Unit?
Labor cost per unit is a measure of the cost of labor that goes into producing one unit of a product. It is a critical metric for businesses to understand the efficiency of their production process and to set appropriate pricing. A lower labor cost per unit indicates a more efficient production process, while a higher labor cost per unit suggests that there may be room for improvement in labor management or production methods.
How to Calculate Labor Cost Per Unit?
The following steps outline how to calculate the Labor Cost Per Unit.
- First, determine the total labor cost (TLC) in dollars.
- Next, determine the total units produced (TU).
- Next, gather the formula from above = LCU = TLC / TU.
- Finally, calculate the Labor Cost Per Unit (LCU) in dollars.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Total labor cost (TLC) = $5,000
Total units produced (TU) = 250 units
