Costing for Labour
Even in a very small business the minimum information required is the total cost of labour. In most businesses management needs a more detailed breakdown of the amounts paid to employees by activity, for each product or service provided, so that they can plan and control costs and make decisions. For example, managers need to know the staff costs in the canteen, the charge out rate for a consultant and the labour costs for undertaking a particular job. Once systems have been established to collected this detailed information, the labour cost of a particular product or service can be calculated. For example, a car manufacturer can establish the labour costs of producing one particular model; a civil engineering company the labour costs of constructing a particular building; a plumber the labour costs of a particular job.
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