Understanding Manpower Costs: How Do They Impact Your Production Efficiency?

Calculating Manpower Cost in Relation to Production

To calculate manpower cost in relation to production, you need to consider several factors. First, determine the total number of employees working on the production line. Next, calculate the wages or salaries of each employee involved in the production process. Include any additional costs such as benefits, insurance, and taxes associated with the workforce.

Once you have gathered all the relevant cost information, divide the total manpower cost by the total production output. This will give you the manpower cost per unit of production. Analyzing this figure can help you understand the efficiency of your workforce in relation to the production output and identify any areas for improvement.

By accurately calculating and monitoring the manpower cost with respect to production, you can make informed decisions to optimize resources, improve productivity, and ultimately enhance your company's bottom line.

For example, I am employing 2 workers for 8 hours, and their salary is $100 each. If they produce 80 kgs of production each in the 8 hours, then the cost of production will be $200 / 160 = $1.25 per kg of production.

I have a suggestion. I propose that your unit of production be the Metric Ton. Suppose your final finished production in a month is, say, 800 MT.

If a worker works for 8 hours, it equals 1 manday, and for 26 days, it equals 26 mandays. Suppose you have deployed 10 workers per day, which is 8 mandays daily and for 26 days, totaling 208 mandays for that production.

I assume that a worker receives wages of Rs. 200 per day. Therefore, for 208 mandays, the total wages would amount to Rs. 41,600.

If Rs. 41,600 is the manpower cost for 800 MT, then the formula will be (C) / (A) = manpower cost per ton. Rs. 41,600 / 800 MT = Rs. 52 will be the cost per worker per MT production. In other words, for producing 1 MT of production, the manpower cost will be Rs. 52.

I hope you have understood this.

Regards,