Rework labor time is considered an overhead cost and not a direct labor cost.

Question

Quizplus · Accepted Answer

Rework labor time is the time spent by employees to correct errors or defects in the products they have previously worked on. Since this time is not spent on creating new products or providing direct services to customers, it is not considered a direct labor cost. Instead, it is classified as an overhead cost, which is an indirect cost that is incurred to support business operations as a whole. Examples of other overhead costs include rent, utilities, and office supplies.

Rework Labor Time Is Considered an Overhead Cost and Not