Direct labour cost refers to the expenditures on wages paid to operators who are directly involved in the production of a product, service, or cost unit. It's part of the direct cost of sales and can be measured through the time spent on activities and operators' pay rates.
Labour costs refer to the total expenditure on wages paid to workers who are directly or indirectly involved in the production of a product, service, or cost unit. This includes both direct and indirect labour costs.
In absorption costing, percentage on direct labour cost serves as a crucial method for allocating production overheads to cost units, ensuring accurate accounting and cost management.
