Distinction between Direct and Indirect Employee Cost

 

Distinction between Direct and Indirect Employee Cost:

	Direct employee cost		Indirect employee cost
1.	It is the cost incurred in payment of employees who are directly engaged in the production process.	1.	Cost incurred for payment of employee who are not directly engaged in the production process.
2.	Direct employee cost can be easily identified and allocated to cost unit.	2.	Indirect employee cost is apportioned on some appropriate basis.
3.	Direct employee cost varies with the volume of production and has positive relationship with the volume.	3.	Indirect employee cost may not vary with the volume of production.