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Article: Cost terminology in the 21st Century: using direct labor cost in a costs vs. resources framework: updating the traditional treatment of cost terms can improve business decisions.
- Article from:
- Management Accounting Quarterly
- Article date:
- March 22, 2004
- Author:
CopyrightCOPYRIGHT 2004 Institute of Management Accountants. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Activity-based costing measures resources used for an activity by the cost driver ... The resources supplied to an activity are the expenditures or the amounts spent on the activity ... The difference between resources supplied and resources used is unused capacity. (1) (Emphases authors)
Labor costs have caused both confusion and controversy in costing circles. Labor costs were originally flexible costs, because workers were paid in proportion to the hours they worked ... scheduling and union considerations have changed most labor costs into capacity-related costs, because even though many workers are paid on an hourly basis, their wages are guaranteed to be ...