Direct Labor, Direct Materials, and Overhead costsin Business (Education) by vomms
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Direct Labor, Direct Materials, and Overhead costs
One of the things that makes accounting tricky is that many common everyday words have very precise definitions in accounting. "Depreciation" is one good example. "Overhead" is another. They are common words that everyone understands. But in accounting, the words have special meaning. In order to get your homework correct, you need to have a clear understanding of the precise definitions.
The definition of direct labor is pretty easy. Direct labor represents the people who do the core work of the business. For example, if the business is a construction company, direct labor would be the people actually constructing the building. They would be the people with hammers and saws in their hands....