What Are Direct Labor Costs?

Direct labor cost refers to the labor cost directly used for product production. When formulating a direct labor cost standard for a product, it is first necessary to study the production process of the product, to study which processes, operations or operations, procedures, etc. Secondly, it is necessary to study the wage payment forms and systems of enterprises in order to formulate standards based on actual conditions.

Direct labor cost

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Direct labor costs

Direct labor costs

Accounting for direct labor costs:

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Direct labor cost audit:

(1) Spot check the product cost calculation sheet, check the cost calculation, the cost allocation standard and calculation method, and check with the material cost allocation summary table.

(2) Examine the authenticity of the consumed quantities, and check whether non-production materials are included in the direct material expenses.

(3) Analyze and compare the direct material cost of each year before and after the same product. If there is a significant fluctuation, the cause should be identified.

(4) Analyze and compare the labor expenses incurred in each month of the year. If there are abnormal fluctuations, the cause should be identified.

(5) Based on the review of payable pay, check whether the labor cost accounting records and accounting treatment are correct.