Tuesday, August 20, 2013

Importance of Labor cost


Importance Of Labor Cost
Proper study, analysis and control of labor costs are important to all manufacturing concern because of the following reasons.

*   Labor cost is main element of cost which covers one of the major portions of the total cost of a product or job.

*   Labor cost is more difficult to control as compared to material cost due to the involvement of human element.

*   Labor cost is affected due to a change in government policy and requirement of trade union.

*   Labor cost is adversely affected due to dissatisfaction , irregularity, inefficiency,   idle time, high labor turnover, lack of interest and negative attitude of the       workers.

*   Labor cost is important from the fact that the direct labor cost is taken as the     basis of estimating the amount of factory overheads while determining the       product cost.

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