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Labour cost

Cost Accounts 745 views 3 replies

 

Labour is a variable cost. The payment is made on piece or hour basis. 
But what will be the treatment if the Labours are permanently appointed in the company. I mean a fixed monthly payment irrespective of production.
Will this scenario change the treatment of labour cost from variable to Fixed cost?
Replies (3)

Yes. The very nature of the Labour is being changed from Variable to Fixed. The labours will be paid even if there is no production, in short it is a Fixed Cost, which will be irrelevant for decision making.

 

 

Regards,

Devendra Kulkarni

Thank You Mr.Devendra..

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