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

ByHoang TruongUpdated June 30, 2026

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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.

Where it fits

TopicCost Terms & ClassificationCoreSubjectCost AccountingCore

The formula

LaTeX

DL = h \times w

Variables

$D L$: Direct labour cost per unit (€)
$h$: Labour hours required per unit (hours)
$w$: Wage rate per hour (€/hour)

Check yourself

PracticeCORE

An assembly worker earns €18 per hour and takes 45 minutes to complete one unit. What is the direct labour cost per unit?

Select an answer to check your understanding.