ECONOMICS

Detailed explanation-1: -Indirect labor: Indirect labor is the labor of those who are not directly involved in the production of the products. An example would be security guards, supervisors, and quality assurance workers in the factory. Their wages and benefits would be classified as indirect labor costs.

Detailed explanation-2: -In a manufacturing setting, administrative staff, maintenance staff, accounting staff, and supervisors would all be considered indirect labor. Just like direct labor costs, it’s important to track indirect labor costs.

Detailed explanation-3: -Direct labor is the cost of the workers who make the product. The cost of supervisory personnel, management, and factory maintenance workers, although they are needed to operate the factory, are classified as indirect labor because these workers do not use the direct materials to build the product.

Detailed explanation-4: -Examples of indirect costs are production supervision salaries, quality control costs, insurance, and depreciation.

Detailed explanation-5: -Direct costs generally include: Salaries are wages (including vacations, holidays, sick leave, and other excused absences of employees working specifically on objectives of a grant or contract – i.e, direct labor costs). Other employee fringe benefits allocable on direct labor employees.