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Direct labor cost is the part of labor cost (payroll costs) that is used directly in the production of goods, performance of a particular work order, or provision of a service.[1]
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Direct labor cost may be determined by:
In manufacturing, the direct labor cost is part of the manufacturing cost per item and scales proportionally to the number of items produced. This is in contrast to indirect labor cost, (for example, supervisory staff), which is not directly proportional to manufacturing costs and is considered an overhead expense.[1]
The direct labor cost may be calculated as the product of working time and employee total cost, inclusive of wages and benefits.[1][2]
Depending on the context, labor burden may be calculated on an hourly, daily, or other basis.[3]
The job time may be measured via one of the following methods:[4]
