# How to work out target labour time per unit (minutes) ?

ayshazeemalik
Just JoinedPosts:

**1**Registered
The price which the will be sold is £30, 20,000 units

fixed cost are £180,000

labour rate is £15

profit margin is 40%

material requirement is 250g per unit

material cost is £16 per kg

I just dont understand how I work out the target labour time per unit (minutes)?

fixed cost are £180,000

labour rate is £15

profit margin is 40%

material requirement is 250g per unit

material cost is £16 per kg

I just dont understand how I work out the target labour time per unit (minutes)?

## Comments

2,453RegisteredSales = 20,000 * 30 = 600,000 (cost of sales plus profit)

Profit = 40% * 600,000 = 240,000 (40% of sales (margin)

Cost of sales = 600,000 - 240,000 = 360,000

Cost of sales exists of:

Fixed costs of 180,000

Material cost 80,000

(20,000 units of 250gr each is 5000kg * 16 per kilo)

Labour cost 100,000

Ideal labour cost is 360,000 - 180,000 - 80,000 = 100,000)

So if we want the labour cost to be 100,000 and the rate is £ 15 per hour, we want the staff to spend 6667 hours on creating 20,000 products. 6667 hours divided by 20,000 is 0.33 times 60(minutes instead of hours) means 20 minutes per product.

Hope that helps!