{"id":368,"date":"2020-08-21T14:50:40","date_gmt":"2020-08-21T09:20:40","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=368"},"modified":"2025-12-27T17:56:31","modified_gmt":"2025-12-27T12:26:31","slug":"labour-cost","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/labour-cost\/","title":{"rendered":"Labour Cost &#8211; Free Cost Accounting Articles"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e8fc7e4b49e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e8fc7e4b49e\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/#Labour_Cost\" >Labour Cost<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/#MEANING_AND_CONCEPT\" >MEANING AND CONCEPT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/#DIRECT_AND_INDIRECT_LABOUR_COST\" >DIRECT AND INDIRECT LABOUR COST<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/#1_Direct_Labour_Cost\" >(1) Direct Labour Cost<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/#2_Indirect_Labour_Cost\" >(2) Indirect Labour Cost<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/#Merricks_differential_piece_rate_system\" >Merrick\u2019s differential piece rate system:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Labour_Cost\"><\/span>Labour Cost<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MEANING_AND_CONCEPT\"><\/span>MEANING AND CONCEPT<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is the second important element of the cost of production. Wages, salaries and other forms of remuneration represent a major portion of the total cost of a product or service. The growth and profitability of the concern depend upon proper utilisation of human resources or labour force, which in turn needs proper accounting and control of costs. Thus, control of labour cost is a very significant issue from the viewpoint of management.<\/p>\n\n\n\n<p>If you want to learn more about this topic, you can watch the lecture below.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIRECT_AND_INDIRECT_LABOUR_COST\"><\/span>DIRECT AND INDIRECT <a href=\"https:\/\/www.youtube.com\/playlist?list=PLJ_81_DlRlydix7pL2yOZvNwjTC2NE4Hs\" data-type=\"link\" data-id=\"https:\/\/www.youtube.com\/playlist?list=PLJ_81_DlRlydix7pL2yOZvNwjTC2NE4Hs\" target=\"_blank\" rel=\"noopener\">LABOUR COST<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The cost of labour can be classified into two types:<br>(1) Direct<br>(2) Indirect <\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Direct_Labour_Cost\"><\/span>(1) Direct <a href=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/labour-cost\/\" rel=\"noreferrer noopener\">Labour Cost<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Any labour cost that is specially incurred for or can be readily charged to or identified with a specific job, contract, work order or any other cost unit is termed as direct labour cost. Wages for supervision, wages for foremen, and wages for labours who are actually engaged in operation or process are examples of direct<br>labour cost.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Indirect_Labour_Cost\"><\/span>(2) Indirect Labour Cost<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Indirect labour is for work in general. The importance of the distinction lies in the fact that. In contrast, direct labour can be identified with and charged to the job; indirect labour cannot be so charged and has, therefore, to be treated as part of the factory overheads to be included in the cost of production. For example, salaries and wages of supervisors, storekeepers, maintenance labour, etc<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Merricks_differential_piece_rate_system\"><\/span>Merrick\u2019s differential piece rate system: <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This method is also known as the \u2018Multiple piece rate system\u2019. Under this method, three grade piece rates are used instead of two, as in the case of Taylor\u2019s. The features are as follows:<br>(i) There is no guaranteed wage.<br>(ii) Standard time is fixed for each work.<br>(iii) Slabs are:<br>Up to 83.33% of the standard output-100% of ordinary piece rate.<br>Above 83.33% and up to 100% of the standard output -110% of ordinary piece rate.<br>Above 100% of the standard output- 120% of ordinary piece rate.<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/inventory-turnover-ratio-formula\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/inventory-turnover-ratio-formula\/\">Inventory Turnover<\/a><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/stock-levels\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/stock-levels\/\">Stock Levels<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/overheads-cost-accounting\/\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/overheads-cost-accounting\/\" rel=\"noreferrer noopener\">Overheads<\/a><\/td><td class=\"has-text-align-center\" data-align=\"center\"><span style=\"color:#fc0505\" class=\"has-inline-color\"><a href=\"https:\/\/scholarsclasses.com\/blog\/material-cost-tybcom\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/material-cost-tybcom\/\">Material Cost&nbsp;<\/a><\/span><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/gantt-task-and-bonus-plan\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/gantt-task-and-bonus-plan\/\">Gantt Task Bonus Plan<\/a><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/variance-analysis-labour-variances\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/variance-analysis-labour-variances\/\">Labour Variances \u2013 Standard Costing<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/rowan-premium-plan-labour-cost\/\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/rowan-premium-plan-labour-cost\/\" rel=\"noreferrer noopener\">Rowan Premium Plan<\/a><\/td><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/standard-costing-material-variance\/\" target=\"_blank\" rel=\"noreferrer noopener\">Standard Costing \u2013 Material Variance<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":371,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[142],"class_list":["post-368","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bcom","tag-labour-cost"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/368","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=368"}],"version-history":[{"count":19,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/368\/revisions"}],"predecessor-version":[{"id":41788,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/368\/revisions\/41788"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/371"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=368"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=368"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=368"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}