Misplaced Pages

Direct labor cost

Article snapshot taken from[REDACTED] with creative commons attribution-sharealike license. Give it a read and then ask your questions in the chat. We can research this topic together.
(Redirected from Labor cost)
This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages)
This article's tone or style may not reflect the encyclopedic tone used on Misplaced Pages. See Misplaced Pages's guide to writing better articles for suggestions. (January 2025) (Learn how and when to remove this message)
This article needs additional or more specific categories. Please help out by adding categories to it so that it can be listed with similar articles. (January 2025)
(Learn how and when to remove this message)

Direct labor cost is a part of wage-bill or payroll that can be specifically and consistently assigned to or associated with the manufacture of a product, a particular work order, or provision of a service. Also, we can say it is the cost of the work done by those workers who actually make the product on the production line.

Determination of the direct labor cost

  • Planning the work to be performed.
  • Describing the job content of the work, by indicating the skill, knowledge, etc.
  • Matching the jobs with the employees.

Usage

The direct labor cost is part of the manufacturing cost.

Calculation of direct labor cost

In the direct labor cost we need to have the job time and wage we will pay it to the worker to calculate the direct labor cost as in this formulation:- 


  
    
      
        
          Direct labor cost
        
        =
        
          job time
        
        ×

        
          wage
        
      
    
    {\displaystyle {\text{Direct labor cost}}={\text{job time}}\times {\text{wage}}}

Depending on the context, there are various methods to calculate personnel costs, such as on an hourly or daily basis.

Wage

The wage is the payment rendered to the worker per hour as a compensation for the work done.

Calculating job time

The job time needs to be measured by one of the following ways:

  1. time study
  2. work sampling
  3. Predetermined motion time system

See also

References

  1. Ostwald, P. F., McLaren, T. S. Cost Analysis and Estimating for Engineering and Management, Prentice Hall, 2004, ISBN 978-0-13-142127-1
  2. "Calculate Personnel costs". EU Funds. Retrieved 17 February 2022.
  3. Kanawaty, G. Introduction to Work Study, International Labour Office, 1992, ISBN 978-92-2-107108-2


Stub icon

This economics-related article is a stub. You can help Misplaced Pages by expanding it.

Categories:
Direct labor cost Add topic