Is the direct labour cost really a direct cost?

Dear Proffesional Friends,

According to the guidelines issued by the ICAI (Institute of Cost Accountants of India) all cost that cannot be attributed directly to a product like Power, water, diesel etc. are "indirect costs". On a similar note "Labour" which is producing say "five different products" in a day, then there cost/wages for the day also needs to be allocated as it cannot be attributed directly to any of the products. We cannot say "this much labour is used for this and this much for that and we have to allocate it to various products by taking some activity base. 

So I think nomenclature of direct labour is wrong as like staff they are also indirect.

Guys,I want your view on this.

Thanks,

CMA Anupam Mathur

 

 

 

Replies (2)

but Mr. Anupam, it is possible to say that this much of labour hour has been allocated for this much of product. so i think the nomenclature seems to serve the purpose.

Srividya, Thanks for your answer. but labour hours can be used as the activity base for allocating the monthly Labour cost. It is same as machine hours used to allocate the power cost.

And secondly what if you are not paying the hourly wages to the labour.

CMA Anupam Mathur.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 12 September 2026
Assistant Manager - Finance & Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
09 September 2026
Semi Qualified CA / CA Inter - 2 Groups Cleared

Getmyca Consultant Pvt Ltd

New Delhi

CA Inter

View Details
Company
09 September 2026
Chartered Accountant

Aviv Global Private Limited

Ahmedabad

CA

View Details
Company
30 September 2026
Senior Accountant

Codeboard Technology

Chennai

B.Com

View Details
Company
15 September 2026
Client-site CA associate

Aditya Muley and Co

Mumbai

CA

View Details
Company
30 September 2026
Senior Accounts Executive

Codeboard Technology

Chennai

MBA

View Details
Company
ARTICLESHIP 21 September 2026
CA Article Assistant

KK & Company Chartered Accountant

Pune

CA Inter

View Details
Company
ARTICLESHIP 18 September 2026
Industrial Trainee

Twenty Point Nine Five Ventures Private Limited

Noida

CA Inter

View Details