Labour Efficiency Ratio Formula

Labour Efficiency Ratio Formula

Labour efficiency ratio is calculated by dividing the expected or standard labour hours with actual time taken by labour. This ratio explains the performance or efficiency of labour work force.

Labour Efficiency Ratio =   Expected Time.   x 100

                                        Actual Time

Example

Labour hour required for per unit production of equipment A = 8 Hours

Total Number of unit produced =400 units

Actual hour taken in production = 4000 Hour

Solution

Standard hours = 400 unit x 8 hr= 3200 hrs

Labour Efficiency Ratio =   Expected Time.   x 100

                                        Actual Time

=3200/4000 x 100

= 80% (Labour efficiency)

Labour efficiency has been 80%, which is 20% below than expectation