Calculate labor cost per unit from total labor cost and units, or build hourly rates and batch pricing with wages, burden, overhead, and profit.

Use output and labor cost for the same period. Optional costs are per unit; blanks mean zero.

Use one currency throughout and avoid overlapping burden/overhead costs. Profit inputs are margins on revenue, not markups on cost.

Optional settings

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 positive output units for the same production scope and period.

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. Labor cost per unit reflects both compensation and production output. Compare output per labor hour, quality and consistent cost inclusions when assessing efficiency.

How to Calculate Labor Cost Per Unit?

The following steps outline how to calculate the Labor Cost Per Unit.

  1. First, determine the total labor cost (TLC) in dollars.
  2. Next, determine the total units produced (TU).
  3. Next, gather the formula from above = LCU = TLC / TU.
  4. Finally, calculate the Labor Cost Per Unit (LCU) in dollars.
  5. 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