publication . Article . 2013

INDIRECT LABOR COSTS AND IMPLICATIONS FOR OVERHEAD ALLOCATION

Bea Chiang;
Open Access
  • Published: 01 Jan 2013 Journal: Accounting & Taxation, volume 5, issue 1, pages 85-96
Abstract
Cost accounting typically allocates indirect labor cost to cost object based on direct labor hours. The allocation process implicitly assumes that indirect labor costs vary proportionally with direct labor hours. The assumption of a linear relationship between indirect and direct labor is particularly suspicious at low production volume levels because there tends to be a fixed component in indirect labor. The linearity assumption is also challenged by recent increasing complexity of indirect labor tasks. As automation technology replaces some work of the of traditional labor, the cost of non-production workers becomes an important element of manufacturing overhe...
Subjects
ACM Computing Classification System: ComputingMilieux_THECOMPUTINGPROFESSIONComputingMilieux_GENERAL
free text keywords: Indirect Labor Cost, Labor Cost, Overhead Allocation, Cost Accounting, Indirect Labor Cost Allocation, jel:J3, jel:M2
Powered by OpenAIRE Research Graph
Any information missing or wrong?Report an Issue