What are the direct cost of work?

Direct costs of work are part of the payroll of the company, which is directed to the limits of employees who are directly involved in the production of the product or by providing the service. They are different from indirect working costs that relate to the limits of those associated with the creation of a product, but not in a direct production line, such as the technicians of the machine. Understanding direct labor costs is an important part of the creation of budget analysis and trading costs.

The best way to find out whether the wage of a particular employee contributes to direct labor costs, to ask whether or a specific product could be provided or provided without their work. The person who installs the car door is part of direct work, because without it the car would be unfinished. The household would be considered a direct work, because without it the house would not be cleaned. Those who are involved in the indirect labor costs can make this process easier as adMinister who reserve jobs or sales staff launching the product, but the product or service could exist without them.

Division workers benefits their benefits to direct or indirect working costs help to determine the total cost of the service or product. For example, while all businesses may need administrators, administrators and other indirect workers, the number of workers required and wages may vary if the company produces teddy bears or dolls. In order for the toy to decide which product to achieve, it will have to look at the material costs plus the direct labor costs compared to the expected profits. If teddy bears can be produced at significantly lower direct costs, the company can provide a higher profit range, and so it is a better choice.

In order to detect direct labor costs, the company must analyze several factors, including the cost of Wages per unit of production and the required quota of each product. If the company wants to produce 100 teddy bears a week and each employee can make one teddy bear in an hour, it will take 100 hours to meet this quota. By multiplying the amount of hours needed for the hourly wage of employees who make bears, the company will know how much direct labor costs to produce 100 bears a week. So if there are two employees who each work 50 hours a week and receive $ 10 (USD) per hour, the direct cost of production of 100 teddy bears could be expressed as: 2 employees x 50 hours x 10 USD = $ 1,000.