ECONOMICS

Detailed explanation-1: -Direct labor costs are added to the Work-in-Process account at the end of the work week. Indirect labor costs are added to the Factory Overhead account. Direct labor costs are calculated by adding up the number of hours each employee worked and multiplying that by the pay rate.

Detailed explanation-2: -Direct labor costs are a function of the wages paid (including all costs to the manufacturer of employing a worker), the number of laborers necessary to run the process, and the paid operating time.

Detailed explanation-3: -What is Direct Labor? Direct labor refers to the salaries and wages paid to workers directly involved in the manufacture of a specific product or in performing a service. The work performed must be related to the specific task.

Detailed explanation-4: -Direct labor is considered to be a direct cost, which means that it varies directly with revenue or some other measure of activity. This is not necessarily the case in a production environment, where the manufacturing area typically requires a certain amount of staffing, irrespective of the number of units produced.