The simplest method for calculating direct labor cost is represented by multiplying the total hours worked times the wage rate for the period of time in question. The equation looks like this: direct labor cost equals total labor hours times labor rate.Know More
Labor costs are segregated in two categories: direct labor costs and indirect labor costs. Direct labor costs are the total costs incurred by workers directly working to produce goods or provide services for customers. Indirect labor costs include the labor rates paid to support and run the business such as management, administration or building maintenance. Indirect labor costs have no direct relation to the production of goods or services.
For many businesses, direct labor costs are more than wages paid to employees. For these businesses, direct labor costs should include employee benefits and payroll taxes in addition to wages. This might include health and life insurance, workers' compensation insurance, company matched retirement contributions, and payroll taxes for all direct laborers.Learn more about Accounting
Average total assets are calculated by adding together the value of assets at the beginning and end of an accounting period and dividing the sum by two, according to TheFreeDictionary. An accounting period is defined as the period of time reflected in the financial statements of businesses, usually a quarter or a year.Full Answer >
The funded debt to EBITDA ratio is calculated by looking at the funded debt and dividing it by the earnings before interest, taxes, depreciation and amortization. Funded debt is long-term debt financed debt, such as bonds, that comes due in a longer time period than a year.Full Answer >
Sales are calculated by multiplying the units sold by the price. Sales turnover is the summation of all sales made within a year. It includes both credit and cash sales.Full Answer >
To calculate the effective labor rate of a dealership, the manager must divide the total sales figure by the total hours billed over a specific period. The manager at a dealership with different classes of technicians must calculate the effective labor rate for each technician separately and find the average.Full Answer >