Direct labor cost

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[edit]

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[edit]

The direct labor cost is part of the manufacturing cost.

Calculation of direct labor cost[edit]

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:^[1]-

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

Depending on the context, there are various methods to calculate personnel costs, such as on an hourly or daily basis.^[2]

Wage[edit]

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

Calculating job time[edit]

The job time needs to be measured by one of the following ways:^[3]

References[edit]

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

[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

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