Difference Between Direct and Indirect Labor. (Cost Accounting)
Wages paid to the direct laborer is called direct labor or direct wages, or productive wages or manufacturing wages. Direct laborers are engaged to alter the construction, composition, condition of the material & convert the materials in to the finished products. Direct labors are easily indefinable. These are also conveniently measured & directly charged to the cost of production. Example of direct labor is the wages paid to the factory workers.
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Wages paid to the indirect laborer is called indirect labor cost, or indirect wages, or unproductive wages. These laborers are not directly engaged in manufacturing of goods or services. They are engaged generally in office & maintenance activities, selling & distribution of goods & services. Example of indirect labor are wages or salary paid to the office peon, clerk, watch man, store keeper etc.