Which of the following is a labor cost forecasting method?

• A. Forecast by labor hours per day
• B. Labor hours per day
• C. Seasonal demand factor
• D. Employee turnover rate

Answer: (B)

Labor cost is driven by the number of hours worked multiplied by the wage rate. Forecasting labor costs by daily labor hours provides a direct estimate of how much will be spent on wages each day, since you can apply the current wage rate to the projected hours and then sum over the period. This method captures how staffing levels change with demand, giving a practical and actionable forecast for daily labor expense.

Seasonal demand factor and employee turnover rate relate to other influences on costs but don’t directly forecast daily labor expense. Seasonal demand factor adjusts expected volume and may influence how many hours are needed, but it’s not a method by itself for predicting cost. Turnover rate affects costs through hiring, training, and overtime implications, but it’s not a straightforward daily labor-cost forecast method. Focusing on labor hours per day links the cost directly to the driver of wages, making it the most direct labor cost forecasting approach.