Enter the total revenue and wage expense into the calculator to determine the wage percentage. This calculator helps in understanding how much of the revenue is spent on wages.
Wage Percentage Formula
The following formula is used to calculate the wage percentage.
WP = (WE / TR) * 100
Variables:
- WP is the wage percentage (%)
- WE is the wage expense ($)
- TR is the total revenue ($)
To calculate the wage percentage, divide the wage expense by the total revenue and then multiply by 100 to get the percentage.
What is Wage Percentage?
Wage percentage is a financial metric that shows what portion of a company’s total revenue is spent on paying employee wages. It is a key indicator of labor cost efficiency and is used by businesses to assess and manage their wage expenses relative to their revenue generation. A lower wage percentage indicates a more efficient use of labor relative to the revenue produced.
How to Calculate Wage Percentage?
The following steps outline how to calculate the Wage Percentage.
- First, determine the total revenue (TR) in dollars.
- Next, determine the wage expense (WE) in dollars.
- Next, gather the formula from above = WP = (WE / TR) * 100.
- Finally, calculate the Wage Percentage (WP).
- 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 Revenue (TR) = $50,000
Wage Expense (WE) = $10,000