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 In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which ...

of the work done by those workers who actually make the product on the

production line A production line is a set of sequential operations established in a factory where components are assembled to make a finished article or where materials are put through a refining process to produce an end-product that is suitable for onward co ...

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:-

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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:Kanawaty, G. ''Introduction to Work Study'', International Labour Office, 1992, #

time study A time and motion study (or time-motion study) is a business efficiency technique combining the Time Study work of Frederick Winslow Taylor with the Motion Study work of Frank and Lillian Gilbreth (the same couple as is best known through the bio ...

work sampling Work sampling is the statistical technique used for determining the proportion of time spent by workers in various defined categories of activity (e.g. setting up a machine, assembling two parts, idle…etc.). It is as important as all other statis ...

Predetermined motion time system A predetermined motion time system (PMTS) is frequently used to perform Labor Minute Costing in order to set piece-rates, wage-rates and/or incentives in labor (labour) oriented industries by quantifying the amount of time required to perform specif ...

References