Divide the full amount paid for direct labor by the full amount for direct labor hours. For example, if the direct labor hourly rate is $10 and it takes five hours to complete one unit, the direct labor cost per unit is $10 multiplied by five hours, or $50.
To arrive at the total direct labor cost, multiply the amount of time it takes to make one unit by the employee's hourly rate, which includes payroll tax and benefit costs. For example, the hourly rate of $19.46 multiplied by 2.10 hours equals total cost per hour of $40.87.  (The direct labor efficiency variance could be called the direct labor quantity variance or usage variance.). Note that DenimWorks paid $9 per hour for labor when the standard rate is $10 per hour. This $1 difference—multiplied by the 50 actual hours—results in a $50 favorable direct labor rate variance. (The direct labor rate variance could be called the direct labor price variance.). Notice that for the good output in February, the total actual labor costs amounted to $825 and the total standard cost of direct labor amounted to $800. This unfavorable difference of $25 agrees to the sum of the two labor variances: Calculate Per Unit Cost. The direct labor standard rate is your direct labor cost per unit. To calculate the number, multiply the direct labor hourly rate by the number of direct labor hours required to complete one unit. Direct labor hours, also known as the direct labor efficiency standard, is the number of direct labor hours it takes to produce one finished item. If you produce goods in batches, you must calculate per unit direct labor hours. The standard cost of direct labor for the good output produced in February 2014 is computed here: If we assume that the actual labor hours in February add up to 75 and the hourly rate of pay (including payroll taxes) is $11 per hour, the total equals $825. Notice that for the good output in February, the total actual labor costs amounted to $825 and the total standard cost of direct labor amounted to $800. This unfavorable difference of $25 agrees to the sum of the two labor variances: For example, if the direct labor hourly rate is $10 and it takes five hours to complete one unit, the direct labor cost per unit is $10 multiplied by five hours, or $50. Direct Labor Cost Variance. The direct labor cost variance lets you identify when costs exceed the tolerance range. Direct labor hours, also known as the direct labor efficiency standard, is the number of direct labor hours it takes to produce one finished item. If you produce goods in batches, you must calculate per unit direct labor hours. Step 3. Multiply the amount of each worker's direct labor hours by the total amount of workers. Adding to the example above, say there were 100 direct labor workers for the job. Multiply 100 by the number of hours each worked, in this case 80. That comes to 8,000 direct labor hours. However, if you just paid a lump sum for the direct labor costs, you can find the actual direct labor rate by dividing the total amount paid by the actual hours worked. Step 1. Write down the full amount of the direct labor. Let's begin by determining the standard cost of direct labor for the good output produced in January 2014: Assuming that the actual direct labor in January adds up to 50 hours and the actual hourly rate of pay (including payroll taxes) is $9 per hour, our analysis will look like this: Notice that for the good output in February, the total actual labor costs amounted to $825 and the total standard cost of direct labor amounted to $800. This unfavorable difference of $25 agrees to the sum of the two labor variances: Divide the full amount paid for direct labor by the full amount for direct labor hours. Keeping with the example, say you paid $108,000 for direct labor. Divide this amount by the 8,000 direct labor hours worked. The amount of the actual rate per direct labor hour is $13.50. However, if you just paid a lump sum for the direct labor costs, you can find the actual direct labor rate by dividing the total amount paid by the actual hours worked. Step 1. Write down the full amount of the Next multiply every employee's wage rate by the hours worked. Add the total wages earned in one column and add the total hours worked in a second column. Divide the total wages earned by the total hours worked. Once this step is complete you have a direct labor rate per hour for the entire worker population. This takes into account full-and part-time staff. Related Reading: How to Do Absorption Costing Without Direct Material & Direct Labor Costs. Step 4. Finally divide the average hourly direct labor rate by the units produced per hour. This equals the direct labor cost per unit. Use this figure to determine the effectiveness and cost benefit for the production process. This represents one piece of the costing proces
http://www.ehow.com/how_8098041_calculate-cost-per-hour-rate.html http://www.accountingcoach.com/standard-costing/explanation/3 http://www.bayt.com/en/specialties/q/40239/how-to-calculate-the-labour-cost-per-unit-production/ http://www.accountingcoach.com/standard-costing/explanation/3 http://www.bayt.com/en/specialties/q/40239/how-to-calculate-the-labour-cost-per-unit-production/ http://smallbusiness.chron.com/calculate-actual-rate-per-direct-labor-21752.html http://www.accountingcoach.com/standard-costing/explanation/3 http://smallbusiness.chron.com/calculate-actual-rate-per-direct-labor-21752.html http://smallbusiness.chron.com/calculate-direct-labor-accounting-10457.html
how to calculate cost of direct labor per hour