Question

Distinguish between Direct Labour cost and Indirect Labour cost.

Give two differences between direct labour cost and indirect labour cost.

Answer 1

Direct Labour Costs	Indirect Labour Costs
Direct labour is labour that takes an active and direct part in the production of a particular commodity, e.g., wages.	Labour employed to carry out tasks incident to goods produced or services provided is indirect labour, e.g., a salesman's salary.

Answer 2

Sr. No.	Basis of Distinction	Direct Labour Cost	Indirect Labour Cost
1.	Identification	Direct labour cost Can be wholly and directly identified with a particular product or job.	Indirect labor cost cannot be wholly and directly identified with a particular product or job.
2.	Nature of work	Engaged in actual production of the product.	Engaged in tasks incidental to manufacture (supervision, support, maintenance of records).
3.	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.
4.	Examples	Wages paid to a machine operator, wages paid to a carpenter in a furniture factory.	Wages paid to storekeeper, foreman, timekeeper, watchman.