Labour cost

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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?
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On 19 March 2012 at 21:38 Report
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Chartered Accountant
3769 Points Posted on 19 March 2012

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

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On 19 March 2012 at 22:12
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Posted on 20 March 2012

Thank You Mr.Devendra..

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On 20 March 2012 at 05:46
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Chartered Accountant
3769 Points Posted on 20 March 2012

You can thank me using the thank user icon.

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On 20 March 2012 at 15:13

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