Commercial Applications
Give two differences between direct labour cost and indirect labour cost.
Cost
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Answer
| S.No. | Basis of Distinction | Direct Labour Cost | Indirect Labour Cost |
|---|---|---|---|
| 1. | Identification | Can be wholly and directly identified with a particular product or job. | Cannot be wholly and directly identified with a particular product or job. |
| 2. | Examples | Wages paid to a machine operator, wages paid to a carpenter in a furniture factory. | Wages paid to storekeeper, foreman, timekeeper, watchman. |
| 3. | Nature of work | Engaged in actual production of the product. | Engaged in tasks incidental to manufacture (supervision, support, maintenance of records). |
| 4. | Treatment in costing | Charged directly to the cost of the product (part of prime cost). | Treated as part of factory overhead and apportioned to products. |
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