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  Direct Labour and Direct Expenses

Introduction Direct Labour and Direct Expenses

We have notice the material control and several aspects involved in similar like purchasing, store keeping and issuing. Such as material, labour is another significant element of cost and for entire cost control and cost reduction, of labour cost is of paramount significance. Though, for control and reduction of labour cost, it is necessary to calculate the labour cost in a scientific manner and therefore there should be proper systems of documentation and systems and processes that will help computation of labour cost in a scientific way. It should be kept in mind that labour is not similar to material because there is a human aspect included in it. So, there should be a complete study of all associated aspects of labour cost and then single computation and control on the same will be feasible. Consideration should also be paid to the productivity aspect. Low productivity influences in higher labour cost per unit when higher productivity will decrease the labour cost per unit.

In the process of production the role of labour cannot be overlooked despite of the fact that machines are being employed on a vast scale today. The effectiveness of production relies on the successful utilisation of labour force and for that, appropriate accounting and control of labour are required. Skill of labour assists in lowering down the cost of units produced besides increasing the quantity and quality of the output.

Labour can be direct and indirect. Direct labour is can be charged to particular cost units directly. Indirect labour is the direct allocation of which is not feasible. The wages are direct if wages can be allocated to dissimilar jobs or products on a suitable basis and are paid to workers engaged directly in the fabrication of products. If the workers are not straight engaged in the development of products and the wages cannot be recognized to specific jobs or products the wages are indirect. The instances of indirect labour are wages paid to inspectors, material handlers, supervisors, cleaners, workmen, chowkidars, time-keepers, foremen, watchmen, etc. The instance of direct labour is wages paid to workmen put on particular jobs or products in the factory.

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