Direct labour
Direct labour is the wages and payroll costs of workers whose time can be directly traced to converting materials into a specific finished product.
Also known asDL · direct labor
See it move
A formula card states that direct labour cost per unit equals hours per unit multiplied by the wage rate, where h is the hours physically worked on one unit and w is the wage rate per hour. In the worked example, an assembly operation requiring 0.5 hours at €15 per hour gives a direct labour cost of €7.50 per unit; supervisors, inspectors, and maintenance workers are excluded because their time cannot be traced to specific units and is instead classified as indirect labour within manufacturing overhead.
The formula
Variables
- Direct labour cost per unit (€)
- Labour hours required per unit (hours)
- Wage rate per hour (€/hour)
Check yourself
An assembly worker earns €18 per hour and takes 45 minutes to complete one unit. What is the direct labour cost per unit?