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Term of the Day | Investopedia
The sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. The cost of labor is broken into direct and indirect costs. Direct costs include wages for the employees physically making a product, like workers on an assembly line.
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TERM OF THE DAY
Cost Of Labor
The cost of labor is the sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. The cost of labor is broken into direct and indirect (overhead) costs. Direct costs include wages for the employees that produce a product, including workers on an assembly line, while indirect costs are associated with support labor, such as employees who maintain factory equipment.
Breaking it Down:
When a manufacturer sets the sales price of a product, the firm takes into account the costs of labor, material and overhead. The sales price must include the total... Read More
Related to "Cost Of Labor"
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 RELATED DEFINITIONS
Payroll Tax
Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee.
Unemployment Compensation
Funds paid by the state to unemployed workers who have lost their jobs due to layoffs or retrenchment.
 RELATED DEFINITIONS
Production Cost
A cost incurred by a business when manufacturing a good or producing a service. Production costs combine raw material and labor.
Direct Cost
A price that can be completely attributed to the production of specific goods or services. Direct costs refer to materials, labor and expenses related to the production of a product.
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