Total Labour Cost

What is meant by Total Labour Cost?

Total Labour Cost is also known as Labour cost. It is the total expenditure spent on labour in a business. It is the most significant operational cost to hire and manage resources. The cost includes salary, bonuses, payroll taxes, training, and any other kind of expense incurred in the labour division. The total labour cost is divided into direct and indirect costs. The direct cost or expenses include the salary or wages of employees that produce the product and indirect cost is the cost that is related to labourers who support the production; those who maintain factory equipment and machinery. 

How to calculate Total Labour Cost?

The generic formula to calculate labour cost is;

Total Labour Cost = (Labour % * Total sales) / Average hourly rate of labour  

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