How do you calculate labor cost per good unit?

Multiply units produced by labor cost per unit and by first-pass yield, then add rework labor for the total; divide by units to get per-unit. With 5,000 units at $1.85, 94% yield and $600 rework, total labor is $9,295 and the spread is about $1.859 per unit.

What is a good labor cost per good unit?

There's no universal target — it depends on your part and standard rate. The signal is the gap between your standard per-unit labor and this yield-and-rework-adjusted figure; a small gap means quality is tight, a large gap means rework is eroding margin.

Why does first-pass yield matter for labor cost?

Every part that fails first pass either gets reworked (adding labor) or scrapped (wasting the labor already spent). Folding yield in shows the true labor absorbed per good part rather than per part attempted.

Labor cost per good unit vs standard labor cost?

Standard labor cost assumes everything runs right the first time. Labor cost per good unit reflects reality — including the rework hours your standard sheet never charged for. The difference is your hidden quality tax.

How do I lower this number?

Raise first-pass yield so fewer parts need rework, and cut the rework labor per incident. In the example, closing the 6% yield gap and trimming the $600 rework both pull the per-good-unit cost down directly.

Should rework labor include inspection time?

Include the labor actually spent salvaging failed parts. Whether you fold in extra inspection depends on your costing convention, but be consistent so period-to-period comparisons stay valid.

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Labor Cost Per Good Unit Calculator

Labor Cost Per Good Unit reveals what your direct labor actually costs once yield and rework are baked in — not the tidy standard rate, but the real number per sellable part. It applies first-pass yield to your per-unit labor and then adds back the rework labor spent salvaging the parts that failed the first time. Cost accountants, continuous-improvement engineers, and operations managers use it to expose how quality problems inflate labor cost that a standard costing sheet hides. When scrap and rework are quietly eating margin, this metric puts a dollar figure on it and makes the case for fixing the process instead of just running more parts.

What this calculator does

Translate direct labor spend into a true cost per saleable good unit by accounting for yield loss and rework labor.
A cost accountant determining how scrap and rework inflate the real labor cost embedded in each shippable part.
It computes total direct labor cost adjusted for first-pass yield plus rework, and spreads it across units produced to show cost per good unit.

Formula used

Good-unit labor cost = units produced x labor per unit x first-pass yield% + rework labor
Labor cost spread per unit = total labor cost / units produced

Inputs explained

Units Produced:
Labor Cost Per Unit:
First-Pass Yield:
Rework Labor Cost:

How to use the result

Use it when comparing quality-driven labor waste across lines, building a make-vs-buy or quoting model, or justifying a yield-improvement project.
It treats yield and a single rework figure as the only quality effects; scrapped material cost, warranty returns, and downstream inspection labor sit outside this calculation.

Current U.S. benchmarks

Manufacturing hourly earnings average $30.27 (BLS, Jun 2026), up 4.4% from a year earlier. Median machinist pay is $28.24/hr (OEWS 2025), with state medians on each state page. Manufacturers have 529k open positions nationally (BLS JOLTS).

Common questions

How do you calculate labor cost per good unit? Multiply units produced by labor cost per unit and by first-pass yield, then add rework labor for the total; divide by units to get per-unit. With 5,000 units at $1.85, 94% yield and $600 rework, total labor is $9,295 and the spread is about $1.859 per unit.
What is a good labor cost per good unit? There's no universal target — it depends on your part and standard rate. The signal is the gap between your standard per-unit labor and this yield-and-rework-adjusted figure; a small gap means quality is tight, a large gap means rework is eroding margin.
Why does first-pass yield matter for labor cost? Every part that fails first pass either gets reworked (adding labor) or scrapped (wasting the labor already spent). Folding yield in shows the true labor absorbed per good part rather than per part attempted.
Labor cost per good unit vs standard labor cost? Standard labor cost assumes everything runs right the first time. Labor cost per good unit reflects reality — including the rework hours your standard sheet never charged for. The difference is your hidden quality tax.
How do I lower this number? Raise first-pass yield so fewer parts need rework, and cut the rework labor per incident. In the example, closing the 6% yield gap and trimming the $600 rework both pull the per-good-unit cost down directly.

Last reviewed 2026-05-12.