Cost Accounting

Direct Labour

• The fixed salaries paid to workers that can be directly attributed to specific products or services.

• The wages paid to workers that can be directly attributed to specific products or services.

• The wages paid to workers that can be indirectly attributed to specific products or services.

• Total Salaries and Wages

Prime Cost

• Fixed Labour + Current Materials

• Direct Materials + Direct Cost

• Direct Materials + Direct Labour + Overheads

• Direct Materials + Direct Labour

Direct Materials

• Materials and supplies that are consumed during the manufacture of a product, and which are directly identified.

• Materials and supplies that are consumed during the manufacture of a product, and which are indirectly identified 

• All materials used in the factory.

Unit cost

• Cost of a unit.

• Direct material and direct labour per unit.

• Total expenditure incurred by a company to produce one unit of a particular product.

• Total expenditure incurred by a company to produce, store, and sell one unit of a particular product.

Factory overheads do not include the following:

• Depreciation on manufacturing equipment.

• Labour of wage workers who manufacture the goods.

• Rent of the administrative department.

• Salary of the factory manager.