ECONOMICS

Detailed explanation-1: -The Direct Labor Cost Formula The pay rate multiplied by the time spent working on the project yields the direct labor cost, or Direct Labor Cost= Pay Rate * Project Time. Thus a project that required 2 hours of work at a rate of $20 per hour would yield a direct labor cost of $40.

Detailed explanation-2: -How do you calculate cost per hour? Cost-per-hour is determined by taking fully-loaded-cost in a time period and dividing it by the total number of hours available in that same time period. For example, $100k annual cost / 2080 annual hours = $48 cost per hour.

Detailed explanation-3: -It is calculated by dividing the labour costs by the number of hours worked. Total labour costs consist of costs for wages and salaries, plus non-wage costs (such as employer’s social contributions).