Enter the billable hours and the available hours into the Calculator. The calculator will evaluate the Labor Utilization.

## Labor Utilization Formula

LU = BH / AH * 100

Variables:

- LU is the Labor Utilization (%)
- BH is the billable hours
- AH is the available hours

To calculate Labor Utilization, divide the total billable hours by the available or maximum hours, then multiply by 100.

## How to Calculate Labor Utilization?

The following steps outline how to calculate the Labor Utilization.

- First, determine the billable hours.
- Next, determine the available hours.
- Next, gather the formula from above = LU = BH / AH * 100.
- Finally, calculate the Labor Utilization.
- 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.

billable hours = 300

available hours = 700

## Frequently Asked Questions

**What are billable hours and how do they differ from available hours?**

Billable hours refer to the time spent on tasks that can be charged to a client, while available hours include all potential working hours, regardless of whether they are billable or not.

**Why is calculating Labor Utilization important for a business?**

Calculating Labor Utilization helps businesses understand how effectively they are using their workforce’s available hours for billable tasks, impacting profitability and efficiency.

**Can Labor Utilization affect employee performance and business operations?**

Yes, high Labor Utilization rates can indicate efficient use of workforce time, potentially leading to better performance and profitability. Conversely, low rates may highlight inefficiencies or overstaffing.

**How can businesses improve their Labor Utilization rate?**

Improving Labor Utilization can involve better project management, reducing non-billable tasks, and ensuring that employees have the right tools and training to work efficiently.