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How to Calculate Direct Labor Rates in Accounting

Calculating the labor costs directly associated with the production of a product or delivery of a service.

By Motley Fool Staff – Updated Apr 23, 2025 at 12:36PM

Key Points

  • Direct labor rates include wages, taxes, and benefits directly tied to producing goods or services.
  • Exclude indirect labor like supervisors from direct labor rate calculations.
  • Monitoring direct labor costs helps optimize production and improve efficiency.
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