The formula to calculate the effective labor rate is:
\[ \text{ELR} = \frac{\text{LS}}{\text{LH}} \]
Where:
The effective labor rate is a measure of the average revenue generated per hour of labor. It is calculated by dividing the total labor sales by the total labor hours. This metric is important for understanding the efficiency and profitability of labor in a business.
Let's assume the following values:
Using the formula:
\[ \text{ELR} = \frac{5,000}{100} = 50 \, \text{\$/hr} \]
The effective labor rate is $50/hr.
Let's assume the following values:
Using the formula:
\[ \text{ELR} = \frac{7,500}{150} = 50 \, \text{\$/hr} \]
The effective labor rate is $50/hr.
