If it costs $100 to produce a unit of X what is a rough estimate to how much of that goes to labor vs. factory upkeep, machinery, taxes, transportation, raw materials, utilities, etc?
I assume it depends on what is being manufactured though.
This link says the manufacturing costs of vehicles are split between roughly 87% material costs and 13% labor costs. The manufacturing costs are about 1/2 of the total cost to the manufacturer, due to extra costs from stuff like research and development, and honoring warranties. It looks like about 2.5% of a vehicle sold at the MSRP ends up being profit for the car manufacturer. The dealer cut if a vehicle is sold at MSRP is about 17.5%
I assume different types of manufacturing have different associated labor costs as a percentage of overhead.
The above falls right in line with my employer, a large airplane manufacturer. The company says the labor costs to produce each airplane is about 15% of the cost, my union says it’s about 8 to 10%. The company states that include all labor costs, even the vendors, the union counters with the company’s own actual labor costs. In reality, it’s somewhere in between.
In the 90s I worked in a telecommunications manufacturing plant. Manufacturing labour costs were only something like 2 - 3% of the product cost. This only included direct manufacturing labour though.
I don’t know the answer, but labor used to manufacture a good is not overhead, it’s a direct cost. Overhead is indirect cost that can’t be directly assigned to the production of specific goods.
It depends.
This is good to keep in mind whenever people throw around phony numbers on the stimulus package. I keep seeing articles and comments that proclaim that a community received (made up numbers) $10 million in stimulus which created 50 jobs so each job cost $200,000 and we’d be better off giving the money directly.
If you assume that labor costs are approximately 10% of the overall costs then each job is being provided for $20,000, which is extremely reasonable. In addition, the rest of the $190,000 is being spent on materials that create jobs for others or keep them employed.
Any individual stimulus program may be a boondoggle, to be sure, and the jobs created may not be permanent, etc. The wisdom of the way the money is spent depends greatly on lots of factors.
It just needs to be remembered that dividing money by jobs is the worst way to calculate that wisdom. And the same applies to all the other jobs programs, Empire Zones (a New York State program that I’m sure is similar to many elsewhere), and tax incentives that are tried everywhere. They may or may not be stupid but the way to answer that question isn’t the simplistic one.
As the thread is demonstrating, it varies wildly depending on what you are making, and tends to shift depending on levels of tooling and automation.
Cars used to be far more labor heavy, but how much of that is now done by robots. Are they including only direct labor or all of the admin and supervisory structure. Complex devices like cars and electronics may have huge design and engineering teams that even divided among millions of units of production can represent a significant percentage of manufacturing costs.
That’s a terrible analysis. The consumer “cost” (really price) includes the margins for the producer, wholesaler, and retailer so an increase in the cost of labor at the producer will be multiplied by the time it reaches the consumer. let’s assume that the producer has a 25% margin, the wholesaler a 20% margin, and the retailer a 20% margin. If my math is right that means that the produce that is priced at $1 cost $0.50 to produce.
6% of the consumer price of $1 is about 0.17. That means the labor is 1/3 (.17/$.50) of the cost of production.
ETA: and that is just the cost of labor at the producer.
Of course, another reason that car companies are seeing reductions in labor is that they’ve changed the supply chain. If they buy a completed dashboard assembly or bench seat from a third-party supplier, then the supplier’s labor cost becomes part of car company’s materials cost. A car company that did everything itself from scratch would expect higher labor costs even if they were running very efficiently.
It depends strongly on where you are manufacturing. I saw a paper by someone from a major electronics company about ways of deciding on engineering projects to reduce costs. A project that makes sense in the US may not make sense in Vietnam, where the depreciation on equipment to reduce labor is greater than the cost of that labor.
Don’t make too many assumptions, and your math isn’t right.
6% of a consumer price of $1 is 6 cents, not 17. And if you look at the above paragraph you’ll note that 6 cents works out to about one-third of the 16 percent and 19 percent that the producer gets from the retail price of the produce.
And of course that’s “just the cost of labor at the producer.” The original question was “What % of the overhead of manufacturing goes to labor,” not “what percent of the total price.”
It really does depend on the industry. I see a lot of different kinds of industry and in some, labour can be 50% and up. If you’re welding products out of relatively common types of steel, the materials just aren’t that expensive and there’s substantial labour on every part, so the labour costs as a percentage can be quite high.
I glad that there’s someone else who took a cost accounting class on this board. 
I didn’t take any course, but I knew that from reading grant proposals.
I agree, for a different reason. If it’s accurate at all, it must be some kind of an average. Because some produce (like strawberries, raspberries) are almost completely hand-picked, while other kinds of produce are largely mechanically picked. That has to create major differences in the labor cost between them. But the cite gives a flat 6% for ‘fresh produce’.
:smack: Well, my math sucks, but I somehow got the same answer of labor being 1/3 of the cost to the producer.
I know what the OP question was, I was just referring to the claim that raising farmworkers wages would not significantly raise the price paid by consumers.
I got the impression the author was talking only about hand-picked produce, since that would be the most severe test of of the questions of wage/cost relationship. And while, in general I agree that raising wages will result in final costs going up, I really wasn’t trying to do anything more than provide an industry cite to answer the OP’s question.