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# Labor Cost Calculator

Enter the values of the gross pay and per-hour rate in the labor cost calculator and the tool will find the labor cost.

Gross hours per week

hours

Pay Rate

$/hours Absent days per year days Additional annual costs Taxes$

Insurance

$Benefits$

Overtime

$Supplies$

Total revenue

$ADVERTISEMENT Table of Content Get the Widget! Add this calculator to your site and lets users to perform easy calculations. Feedback How easy was it to use our calculator? Did you face any problem, tell us! The labor cost calculator calculates the per-hour labor costs and labor cost percentage. You can also estimate the payable taxes, gross income, and net hours worked per year by the cost of a labor calculator. ## Why Calculate Labor Costs? “Being an employer, it is quite essential to calculate the cost of an employee per year”. The same goes for the employees to calculate their per annum income. You can calculate labor costs with our efficient labour calculator. It is quite essential to calculate employee costs for managing HR expenses. ## How to Calculate Labor Costs? Suppose that the gross working hours per week are 40 and pay rate is$10 per hour, and you are absent 10 days from work in a year. There are taxes of $1000, the insurance cost of$500, benefits of $2000, overtime cost of$500, and supplies expense of $500. If the total revenue is$80000 per year, then how is labor cost calculated? You use our efficient cost of labor calculator to find the labor cost of each employee.

#### Given:

Gross hours per weekÂ  = 40 hours

Â Pay Rate = $10Â per hour Absent days per yearÂ = 10 days Taxes =$1000

InsuranceÂ  = $500 Benefits =$2000

Overtime = $500Â Supplies =$500

The total gross pay is $20800 employees per annum. You can calculate labor costs with the online free labour cost calculator by entering the per-hour rate of an employee. ### Net Hours Worked: Let’s proceed with calculating the Net hours worked. Hours not worked per yearÂ = Absent days per year * 8 Â Hours not worked per year = 10 *8 Hours not worked per yearÂ = 80 hours Â Net hours worked = Gross hours per yearÂ – Hours not worked per year Net hours workedÂ = 2080 – 80 Net hours worked = 2000Â hours The number of hours worked by the employee after deduction of the number of hours not worked per year. By doing this, you can calculate labor hours precisely and labor hour calculation becomes more realistic. Being an employer, it is quite necessary to calculate labor costs and productivity. The labor cost calculations improve the productivity and performance of an organization. ### Additional Annual Costs. Let’s proceed with calculating the Additional annual costs. Additional annual costs =Â Taxes +Â Insurance + BenefitsÂ + Overtime +Â Supplies Additional annual costs = 1000 + 500 + 2000 + 500 + 500 Additional annual costs=$4500

You need to add the additional employees cost of adding the additional cost like the overtime and supplies cost. It is quite necessary to use the employee, true cost calculator to add the overhead when calculating labor costs with overheads.

### Calculating the Labor Costs:

Let’s proceed with calculating the labor costs.

Annual Payroll Labor cost = Gross pay + Other annual costs

You need to find the gross pay plus the other annual cost to calculate the overall labor cost. The organization also bears the other annual cost and the total annual cost should be compared to the efficiency of an employee.Â

Â Annual Payroll Labor costÂ  = 20800 + 4500

Other annual costs = 25300Â

Â Hourly labor cost =Â  Annual Payroll Labor Cost /Net Hours Worked

Hourly labor cost =Â  25300/2000

### Is 20% Profit Good?

A simple rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin.

## References:

From the source of Investopedia.com:Calculate labor cost, How to calculate labor cost?

From the source of learn.robinhood.com:Labor hour calculation, How to calculate labor hours?