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
CAclubindia
