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Indirect labor costs make the production of cost objects possible, but aren't assigned to a specific product. For example, clerical assistants who help maintain the office support the company as a whole instead of just one product line. Thus, their labor can be counted as an indirect cost. Other common indirect costs include advertising and marketing, communication, fringe benefits such as an employee gym, and accounting and payroll services. Much like direct costs, indirect costs can be both fixed and variable.
The cost of labor may be subdivided into the cost of labor related to the production of goods (known as the cost of direct labor) and the cost of labor related to all other activities (known as the cost of indirect labor). It may be necessary to include a large number of benefits in the calculation of the cost of labor.For example, if an employee is paid $1,000 in an accounting period, here is a sample of what the total cost might be:he cost of labor may be subdivided into the cost of labor related to the production of goods (known as the cost of direct labor) and the cost of labor related to all other activities (known as the cost of indirect labor). It may be necessary to include a large number of benefits in the calculation of the cost of labor.