Labour (factor of production)
Labour as a factor of production is human effort and skill applied to producing goods and services. It includes physical and mental work across occupations. The economic category is broader than a payroll cost classification and does not imply that all labour is directly traceable to a unit of output.
Worked example
A designer’s creative work and a production worker’s assembly work both provide labour inputs, even though a costing system may classify their costs differently.
Common mistake
Restricting labour to manual factory work or confusing the factor of production with direct labour in product costing.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Supporting | September 2026–June 2027 |
| FIA | FBT | Supporting | September 2026–June 2027 |