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Presentation Man Hour Rate

A man-hour is a measure of labor equivalent to one hour of work by one person. It is used to estimate the total amount of labor required to complete a task. Man-hours do not account for breaks that workers typically take. To calculate the man hour rate, the total annual costs for employees including salary, training, facilities, and other expenses are divided by the total number of hours worked by employees in a given time period, typically a month. This helps determine the individual cost of each employee and allows management to forecast labor costs and develop policies to reduce costs.

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125 views

Presentation Man Hour Rate

A man-hour is a measure of labor equivalent to one hour of work by one person. It is used to estimate the total amount of labor required to complete a task. Man-hours do not account for breaks that workers typically take. To calculate the man hour rate, the total annual costs for employees including salary, training, facilities, and other expenses are divided by the total number of hours worked by employees in a given time period, typically a month. This helps determine the individual cost of each employee and allows management to forecast labor costs and develop policies to reduce costs.

Uploaded by

akash
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MAN HOUR RATE

MAN HOUR RATE

Aman-houristheamountofworkperformedbytheaverageworkerinone
hour.
Itisusedforforestimationofthetotalamountofuninterruptedlaborrequired
toperformatask.Forexample,researchingandwritingacollegepapermight
requiretwentyman-hours.
Man-hoursdonottakeaccountofthebreaksthatpeoplegenerallyrequirefrom
work,e.g.forrest,eating,andotherbodilyfunctions.

HOW TO CALCULATE MAN HOUR


STEP1;- tocalculatemanhourfirstweneedtoknowthetotalamountofstandardcostthat

hasbeenincurredbyemployeesintheactualfunctioningofthebusinessduringaparticular
year.
Standardcostofemployeecanbeintheformo:1. salary,
2. trainingexpense,
3. facilityexpense
4. OtheroperatingExp.
5. Supportingfunction(Finance,HR)

STEP2;-wecalculatethetotalhoursofworkthathasbeendoneby
employeesinaparticularmonth.
Wetakeintoconsiderationthatanemployeework8hrsaday,soinaweek
hewouldbeworkingforaround40hrs,
Thereforeworkdoneinamonthwouldbe4x40=160.
160isthetotalnumberofhoursthateachemployeefunctionsinaparticular
month.

STEP3;-

INTHISstepthetotalcostthathasbeenoccurredina

particularmonthisdividedbythetotalnumberofhoursthatthe
employeeshavefunctioninaparticularmonthtofindoutthemanhour
rate.
MHR=TOTALCOST/TOTALNO.OFHRS
=1,00,000/160=625

BENEFITS
HELPS IN DETERMINING THE INDIVIDUAL COST OF AN EMPLOYEE, IN THIS COST THAT AN EMPLOYEE
BORN TO THE ORGANIZATION IS BEING CALCULATED AND THEREFORE HIS PERFORMANCE IS BEING
COMPARED WITH THE COST THAT HE INCURRED TO THE ORGANIZATION.

IT IS A TOOL FOR FORECASTING THE COST RELATED WITH THE EMPLOYEES AS INDIVIDUAL COST IS
BEING CALCULATED IT BECOME EASIER FOR MANAGEMENT TO DETERMINE THE AMOUNT AND WHAT
TYPE OF WORK SHOULD BE GIVEN TO THE EMPLOYEES.
HELPS IN FRAMING THE FUTURE POLICIES AND STRATEGIES AS IT PROVIDE THE FRAMEWORK AS
WHAT IS THE COST THAT HAS BEEN INCURRED ON THE EMPLOYEES AND ACCORDINGLY
MANAGEMENT CAN CHECK AND FRAME POLICIES ON THE REDUCTION OF COST AND PROPER
ANALYSIS OF COST

THANK YOU

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