This tutorial explains how the Adjusted Labor Cost is calculated and what all factors into that number.
If you go to your Item Catalog and select one of the Labor Items that you have set up, you'll see a table of different values to the right. First of all, you have your Unit Cost, which is your Average Wage. But then the next number is one called Adjusted Labor Cost. What is it?
That number is a calculation of your Average Wage with some other factors.
Adjusted Labor Cost = Average Wage x Overtime Factor x Unbillable Time x Labor Burden
Average Wage = the average wage of all Crew Members
Overtime Factor = the percentage of hours that are overtime
Unbillable Time = the percentage of hours that are unbillable
Labor Burden = payroll taxes, paid vacation, etc.
This calculation updates your Labor Cost to more accurately represent your Cost than just the Average Wage.
Hope that helps!
Let me know if you have any questions!