Direct Labor Costs

Direct labor costs are those costs which are performed during the production of some product.  The product can be any type of item from a machined part, computer and vehicle.  Labor is required to change a raw material into a product that may be sold or given away.  Direct labor is calculated by taking the direct time a product takes to create multiplied by the rate charged per hour by the processes.  The direct labor may actually be multiple steps on the production of the product. The total direct labor is  the sum of all the labor at the various steps during the creation of the product.  There are many examples of those that provide direct labor including Laser operators, CNC operators, Machine Shop operators, sheet metal workers, wood workers and many others.  You may think that direct labor is just the individual rate that you pay the employee but there is much more to it.  An employee has benefits including health insurance, sick days, vacation pay, FICA and other fees.  Adding up all the fees makes the hourly rate considerably higher than the hourly pay of the employee.

MIE Solutions provides software resources to help you manage your direct and indirect labor throughout the product lifecycle from quoting and estimating, job costing to invoicing.

http://mie-solutions.com/mie/index.php/MIE-QuoteIt-Quoting-and-Estimating-Software/mie-quoteit.html

 

Author: MIE Solutions

David Ferguson has over 20 years of experience in the manufacturing and fabrication industry. David Ferguson has been to over 100 manufacturing companies helping and guiding them to be more efficient and cost effective. As a child in Junior High School David Ferguson found a passion for the early computer systems, which would drive much of his future work. David Ferguson created and sold his first computer program, Arrow Data Systems, which was an early CAD/CAM system for the Apple 2e Computer. In the late 1980's after seeing his father (a sheet metal manufacturer) come home many nights estimating, David Ferguson saw an opportunity to optimize his effort through computer technology. Shortly thereafter the FabriTRAK Production Control package was developed. The Quote It! estimating package was developed out of the FabriTRAK system to become one of the leading sheet metal estimating packages in the world. David Ferguson has always had a passion for developing software to make the manufacturing process simpler, faster and more efficient. Prior to founding MIE Solutions David Ferguson worked with his father at Alco Sheet Metal, METALSOFT Inc. and was a consultant at Toyota Motors Sales. David Ferguson has his Masters in Computer Science and Mathematics from California State University, Long Beach.

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