Workforce, Labor Standards & Skills Planning worked example

Indirect Labor Ratio at 72% allocation coverage of the base: a worked example

Suppose allocation coverage of the base falls to 72%. This page works the full calculation at that level so you can see exactly which result moves and by how much. Translates an indirect-to-direct labor relationship into the support-labor dollars a job should carry.

The inputs for this scenario

  • Direct labor hours in the base: 500 hrs (held at the documented default)
  • Indirect rate per direct hour: 9.5 $/hr (held at the documented default)
  • Allocation coverage of the base: 72 % (the input this scenario stresses; the baseline uses 100)
  • Fixed supervision / salaried cost: 1,200 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Indirect labor cost = direct hours x indirect rate x allocation coverage + fixed supervision.
  • Total indirect labor ratio cost works out to 4,620 $ at these inputs, and this is the headline figure for the scenario.
  • Indirect labor ratio cost per unit works out to 9.24 $ / piece at these inputs.
  • Variable indirect labor ratio cost works out to 3,420 $ at these inputs.
  • Fixed indirect labor ratio adder works out to 1,200 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where allocation coverage of the base sits at 100% and the headline result is 5,950 $, this scenario comes in 22.35% below the baseline at 4,620 $.
  • It applies an indirect rate to a direct-hour base, scales it by the allocation coverage, and adds fixed supervision to give total and per-direct-hour indirect labor cost. When the numbers land here, the stressed input is the lever to work; the walkthrough above shows exactly how much each output recovers as it climbs back toward the baseline.

Results at a glance

  • Total indirect labor ratio cost: 4,620 $ (headline result)
  • Indirect labor ratio cost per unit: 9.24 $ / piece
  • Variable indirect labor ratio cost: 3,420 $
  • Fixed indirect labor ratio adder: 1,200 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Indirect Labor Ratio calculator, set allocation coverage of the base to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.