Direct Labor Costs

The hourly rates of direct labor are determined in the budget procedure. They are calculated by dividing total direct labor expenses by the forecasted number of worked hours. These costs include the annual salaries, the allowances and bonuses, the social costs and other associated costs.

If there are different categories of employees, with different wages, an average hourly rate has to be determined since each cost center is characterized by a single direct labor hourly cost value.