# How To Calculate Direct Labor Cost?

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The amounts of hours worked and by whom for the job times the pay rate and costs of employment added all together.
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A manufacturing company has a government contract to make a product for the first time. The total budget for the 39-unit job is 19,000 hours. The first unit took 1000hours to manufacture, and the rate of learning is expected to be 80 percent.

(a) Use logarithmic approach to estimate the direct labor required for the thirteenth unit.

(b) Show whether the company can complete the 39-unit job within the 19,000-hour budget.

(c) How many additional hours would they require for a second job of 89 additional units?
Conversion Factors for the Cumulative Average Number of Direct Labor Hours per Unit

80% Learning Rate 90% Learning Rate
(n = cumulative production) (n = cumulative production)
n n n n n n
1 1.00000 19 0.53718 37 0.43976 1 1.00000 19 0.73545 37 0.67091
2 0.90000 20 0.52425 38 0.43634 2 0.95000 20 0.73039 38 0.66839
3 0.83403 21 0.51715 39 0.43304 3 0.91540 21 0.72559 39 0.66595
4 0.78553 22 0.51045 40 0.42984 4 0.88905 22 0.72102 40 0.66357
5 0.74755 23 0.50410 64 0.37382 5 0.86784 23 0.71666 64 0.62043
6 0.71657 24 0.49808 128 0.30269 6 0.85013 24 0.71251 128 0.56069
7 0.69056 25 0.49234 256 0.24405 7 0.83496 25 0.70853 256 0.50586
8 0.66824 26 0.48688 512 0.19622 8 0.82172 26 0.70472 512 0.45594
9 0.64876 27 0.48167 600 0.18661 9 0.80998 27 0.70106 600 0.44519
10 0.63154 28 0.47668 700 0.17771 10 0.79945 28 0.69754 700 0.43496
11 0.61613 29 0.47191 800 0.17034 11 0.78991 29 0.69416 800 0.42629
12 0.60224 30 0.46733 900 0.16408 12 0.78120 30 0.69090 900 0.41878
13 0.58960 31 0.46293 1,000 0.15867 13 0.77320 31 0.68775 1,000 0.41217
14 0.57802 32 0.45871 1,200 0.14972 14 0.76580 32 0.67471 1,200 0.40097
15 0.56737 33 0.45464 1,400 0.14254 15 0.75891 33 0.68177 1,400 0.39173
16 0.55751 34 0.45072 1,600 0.13660 16 0.75249 34 0.67893 1,600 0.38390
17 0.54834 35 0.44694 1,800 0.13155 17 0.74646 35 0.67617 1,800 0.37711
18 0.53979 36 0.44329 2,000 0.12720 18 0.74080 36 0.67350 2,000 0.37114
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