Get to know direct labour and indirect labour cost

_____________ labour cost is the remuneration paid to the employees who are directly engaged in the manufacturing operations.

• Direct

• Normal

• Indirect

• Abnormal

Answer explanation

The correct answer is 'Direct'. This is because direct labour cost refers to the wages given to the employees who are directly involved in the production process. These individuals contribute directly to the manufacturing of the product. Other types of labour cost, such as indirect, normal, or abnormal do not directly impact manufacturing operations.

Cleaner is an example of

• Indirect labor

• Prime cost

• Direct labour

• Maintenance

Answer explanation

A cleaner is considered an example of 'Indirect labor'. Indirect labor refers to those workers who are not directly involved in the production of goods but provide support services. In this case, a cleaner provides cleaning services that support the entire operation, hence, they are classified as indirect labor.

Indirect labour for bakery industry consist of ___________. You can choose more than one answer.

• Manager

• Security guard

• Baker

• CEO

Answer explanation

In the bakery industry, indirect labour refers to those who contribute to the production process but are not directly involved in the making of the product. This includes roles like Managers and Security guards, who ensure smooth operations of the bakery but do not bake the goods themselves. On the other hand, the Baker, who is directly involved in the production of bakery items, is considered direct labour.

Direct labour cost can be separated in unit cost, cost or cost centre.

• True

• False

Answer explanation

The statement in the question is true. Direct labour cost can indeed be separated into unit cost, cost, or cost centre. This categorisation helps in managing and accounting for labour costs more effectively.

Direct labour is an example of

• A. Prime cost

• B. Sunk cost

• C. Conversion cost

• A and C

Answer explanation

Direct labour is both a prime cost and a conversion cost. Prime cost refers to the direct production costs, which include direct materials and direct labor. Conversion cost, on the other hand, is the cost incurred to convert raw materials into finished products, which includes direct labor and manufacturing overhead. Therefore, the correct answer is 'Prime cost and Conversion cost'.