👉 Labour math is a method of determining the total cost of producing goods or services by breaking down the costs into direct and indirect components, then applying appropriate rates to find the total expenditure. Direct costs include expenses directly attributable to production, such as raw materials and labor hours. Indirect costs, however, are overheads like rent, utilities, and administrative salaries that are not directly tied to a specific product but are necessary for the business's operation. Labour math involves calculating the cost per unit of labor (e.g., hourly wage times hours worked) and applying this rate to the total number of labor hours used in production. For example, if a factory spends $500 on raw materials and $200 on utilities per unit produced, the total direct costs are $700. If labor costs are $30 per hour and the factory uses 100 hours of labor per unit, the total labour cost is $3,000. The total labour cost per unit is then calculated as ($30
100 hours) / 500 units = $6 per unit. This method ensures precise cost allocation and aids in pricing strategies, profitability analysis, and efficient resource management.
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What is the definition of Labour Math? 🙋
