Page 89 - Microsoft Word - 00 ACCA F2 Prelims.docx

Accounting for labour

Direct and indirect labour

2.1 Direct labour

 basic pay of direct workers (including the basic pay for any overtime)

 overtime premiums when worked at a customer’s specific request

 part of the prime cost of a product

2.2 Indirect labour

 basic pay of indirect workers (for example, maintenance staff, factory
supervisors and canteen staff).

 indirect labour costs make up part of the overheads (indirect costs)

 indirect labour costs also include the following:

– overtime premiums when due to general pressures

– bonus payments

– benefit contributions

– idle time

– sick pay

– time spent by direct workers doing ‘indirect jobs’

Illustrations and further practice

Now try TYU questions 1, 2 and 4 from Chapter 6

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