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| Direct Labour Cost |
Like materials, labour is also classified as direct and indirect. Direct labour is one which is directly involved in converting raw materials into the finished goods. Cost spent on direct labour can be directly traced to the finished goods. Thus, wages paid to the workers who operate machine which manufactures products, to the workers who assemble manufactured part into finished products, or to those who do finishing work on the manufactured goods, are examples of direct labour cost.
Indirect labour is that which is required to perform manufacturing activities generally but is not directly involved in the conversion of raw materials into finished goods. Wages paid to foremen. clerks, material expediters-time keepers. Purchases. and assistants, maintained employees, etc are examples of indirect labour cost.
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