How do you calculate overtime cost per unit?

Multiply the regular rate by the overtime multiplier, hours, and operators to get total overtime labor, then divide by units produced. Here $38 x 1.5 x 6 x 8 = $2,736 over 720 units = $3.80 per unit.

What is the overtime premium versus the total overtime cost?

Total overtime labor is the full amount paid ($2,736), while the premium is only the extra above regular rate: $38 x (1.5 - 1) x 6 x 8 = $912. The remaining $1,824 is the regular-rate equivalent.

Is overtime cheaper than hiring a temp?

It depends on the premium and ramp time. Overtime adds $912 of premium here for known, trained operators with no onboarding; a temp avoids the premium but brings lower output and learning-curve scrap. Compare the per-unit numbers, not just the rates.

What multiplier should I use for overtime?

In the US, hours over 40 per week are typically 1.5x; some contracts or holiday/Sunday work run 2.0x. Use the multiplier in the agreement that applies to those specific hours; the example assumes 1.5x.

Why is my overtime unit cost so high?

Either the premium is steep or output during overtime is low. At $3.80 per unit on 720 units, output is solid; if fatigue cuts output to 600 units, the same $2,736 spreads to about $4.56 per unit.

Should loaded rate or base wage be used?

Use the loaded rate — base wage plus payroll taxes and benefits that scale with overtime hours — so the cost reflects true cash out the door, not just the hourly wage line.

Costing calculator

Overtime Cost Calculator

Overtime cost tells you what a part really costs to make when the line runs past straight time, and how much of that is pure premium you pay just to keep people on the clock. Supervisors and cost accountants use it to decide between authorizing overtime, adding a shift, or pushing work to another week. The premium portion — the extra half or full rate above regular pay — is money that buys no extra material and only extra time. Quantifying it per unit is what turns 'we'll just work Saturday' into an informed cost decision.

What this calculator does

Calculate overtime premium, total labor cost, and unit cost impact for extra production hours.
Use before approving overtime to recover schedule, add capacity, or cover demand spikes.
It computes total overtime labor for a crew, the premium portion above regular rate, and the resulting labor cost per unit produced during overtime.

Formula used

Overtime labor = rate × multiplier × hours × operators
Premium cost = rate × (multiplier − 1) × hours × operators
Overtime unit cost = overtime labor ÷ output

Inputs explained

Regular loaded rate: undefined
Overtime multiplier: undefined
Overtime hours: undefined
Operators: undefined
Overtime output: undefined

How to use the result

Use it when deciding whether to authorize a Saturday or extended shift, or when comparing overtime against a temp crew or outsourcing.
It covers labor only — it excludes the fatigue-driven productivity drop, higher scrap, and utility costs that often accompany extended hours.

Current U.S. benchmarks

U.S. manufacturing runs at 75.6% of capacity (Federal Reserve, May 2026). New factory orders are up 2.3% year over year (Census).

Common questions

How do you calculate overtime cost per unit? Multiply the regular rate by the overtime multiplier, hours, and operators to get total overtime labor, then divide by units produced. Here $38 x 1.5 x 6 x 8 = $2,736 over 720 units = $3.80 per unit.
What is the overtime premium versus the total overtime cost? Total overtime labor is the full amount paid ($2,736), while the premium is only the extra above regular rate: $38 x (1.5 - 1) x 6 x 8 = $912. The remaining $1,824 is the regular-rate equivalent.
Is overtime cheaper than hiring a temp? It depends on the premium and ramp time. Overtime adds $912 of premium here for known, trained operators with no onboarding; a temp avoids the premium but brings lower output and learning-curve scrap. Compare the per-unit numbers, not just the rates.
What multiplier should I use for overtime? In the US, hours over 40 per week are typically 1.5x; some contracts or holiday/Sunday work run 2.0x. Use the multiplier in the agreement that applies to those specific hours; the example assumes 1.5x.
Why is my overtime unit cost so high? Either the premium is steep or output during overtime is low. At $3.80 per unit on 720 units, output is solid; if fatigue cuts output to 600 units, the same $2,736 spreads to about $4.56 per unit.

Last reviewed 2026-05-12.