Direct labor refers to the salaries and wages paid to workers that can be directly attributed to specific finished products.
Identifying the individual cost factors that are attributed to produce a product is important in assessing labor inputs.
Formula to calculate direct labor cost.
Example:
Suppose you employ a direct labor workforce of 5 people, who work 40 hours per week, and they earn an average of $20 per hour. Calculate the direct labor cost of each of the employee in a week.
Therefore, the direct labor cost is $ 800.
