labour hour rate

labour hour rate

a COST RATE which is used in ABSORPTION COSTING to charge the OVERHEADS of a department or COST CENTRE in the cost of a product or job. It is usually used for those departments or cost centres which are less mechanized, and is computed by dividing the budgeted overheads which have been assigned to the department or cost centre by the estimated total number of labour hours for the period, to arrive at a rate per labour hour. The overhead charge for any product or job will depend upon the number of labour hours required for its production. See also ABSORPTION.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson