Labor Percentage Calculator

Formula

To calculate the Labor Percentage (LP):

\[ LP = \frac{TPC}{TR} \times 100 \]

Where:

$LP$ is the labor percentage in terms of total revenue (%)
$TPC$ is the total payroll costs (labor) ($)
$TR$ is the total revenue generated as a direct result of that labor ($)

What is a Labor Percentage?

A labor percentage is a ratio, expressed as a percent, of the total cost of labor with respect to the total revenue generated from that labor. It’s important to note that in the calculation of a labor percentage, those payrolls and labor costs are only included if they are directly resulting in the production or process of making the revenue being analyzed.

Example Calculation 1

Let's assume the following values:

Total Payroll Costs ($TPC$) = $5000
Total Revenue ($TR$) = $20000

Using the formula:

\[ LP = \frac{5000}{20000} \times 100 = 25\% \]

The labor percentage is 25%.

Example Calculation 2

Let's assume the following values:

Total Payroll Costs ($TPC$) = $8000
Total Revenue ($TR$) = $40000

Using the formula:

\[ LP = \frac{8000}{40000} \times 100 = 20\% \]

The labor percentage is 20%.