If salary or wage of direct labor workforce is fixed irrespective of number of units manufactured by them then it is fixed cost other wise it is variable cost.
If salary or wage of direct labor workforce is fixed irrespective of number of units manufactured by them then it is fixed cost other wise it is variable cost.
If direct material and direct labor remains fixed irrespective of production volume then these are fixed costs otherwise these are variable costs and normally these are variable costs because it varies with the production volume.
Direct labor which do not vary with level of production is fixed direct labor while labor vary with change in production is variable direct labor.
Direct labor and direct material is example of variable cost which increase with each increase of unit. Factory rent is example of fixed cost which remains fixed even in change in number of units produced.
Average direct labor cost is the opening direct labor cost + closing direct labor cost / 2
If salary or wage of direct labor workforce is fixed irrespective of number of units manufactured by them then it is fixed cost other wise it is variable cost.
Direct labor is variable cost as well as product cost but for variable cost it must vary with the change in production level otherwise it will be fixed cost.
If direct material and direct labor remains fixed irrespective of production volume then these are fixed costs otherwise these are variable costs and normally these are variable costs because it varies with the production volume.
Direct labor which do not vary with level of production is fixed direct labor while labor vary with change in production is variable direct labor.
Direct labor and direct material is example of variable cost which increase with each increase of unit. Factory rent is example of fixed cost which remains fixed even in change in number of units produced.
Average direct labor cost is the opening direct labor cost + closing direct labor cost / 2
Following is the formula for total costtotal cost = fixed overheads + variable overheads + direct labor + direct material
Prime Costs: Prime costs are those costs which are prime importance for making any product and include: Prime Cost = Direct Material + Direct Labor
The prime cost of a product is the direct cost which includes the materials and labor needed. This does not include the fixed costs attached to the material.
direct labor is direct cost attributable to production of goods.
If direct labor cost creates impact or influences the decision then it is relevant cost but if direct labor is not creating influence or changing in decision then it is irrelevant cost for example direct labor cost remain same irrespective of whatever the decision then direct labor cost is also irrelevant.
Direct labor wages are normally Variable costs, charged directly to the Production Cost Account, what is commonly called WIP. It is commonly held that direct labor wages change proportionally to the changes of the production level. In fact, however, hourly wages are only related to a time unit, not to pieces produced. True direct wages are piece-work wages, but very few industries pay their workers by unit of production. We should have the option to treat a direct labor wage as a fixed cost, just as salary is a fixed cost. Monthly or hourly, these payment are paid by time interval, not by production unit