Labour cost per unit

• What is the formula for labor cost per unit?

  Labor costs divided by units of output
• How is labor cost per unit calculated?

  By dividing total labor expenditure by units produced
• If labor costs are £100,000 and units produced are 500,000, what is the labor cost per unit?

  20 P
• What is the relationship between labor productivity and labor cost per unit?

  Higher productivity leads to lower labor cost per unit
• How does reducing labor cost per unit affect a business?

  It improves cost competitiveness and profitability
• What are some methods to reduce labor cost per unit?

  • Outsourcing tasks to third parties
  • Automation of processes
  • Reducing wages or salaries
  • Using flexible contracts (e.g., Zero Hour contracts)
• What is outsourcing in the context of labor cost reduction?

  Contracting a task to a third party
• What are potential issues with outsourcing?

  Quality control and over-reliance on third parties
• What does automation involve in reducing labor costs?

  Switching to a more capital-intensive organization
• What is a challenge of becoming a more capital-intensive organization?

  The cost of acquiring new technology
• What is a potential drawback of reducing wages or salaries?

  It may affect motivation and labor turnover
• What are flexible contracts in labor cost management?

  Contracts that allow variable working hours
• What are the ethical concerns associated with Zero Hour contracts?

  Potential reputational damage and morale issues
• How can Zero Hour contracts affect labor productivity?

  They could lead to morale and productivity issues
• What is the goal of reducing labor cost per unit?

  To make it as low as possible