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Direct labour

Direct labour is employee effort that can be traced to a particular product, job or service. Time records identify productive hours and support charging cost objects. Distinguish basic productive pay from idle-time cost and overtime premiums, whose treatment depends on why they arise. Payroll measures remuneration and deductions, while labour costing assigns the resulting cost to production or other functions. A cost can be direct even when the employee receives a fixed salary.

Worked example

A job uses 12 productive hours at $20 per hour. Direct basic labour is $240; a supervisor supporting many jobs is normally indirect labour.

Common mistake

Do not charge every paid hour directly to output if some time was idle or spent on general support.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027