Future Business Leaders of America (FBLA) Business Management Practice Test

Are salaries of support staff included in direct labor costs?

1. Yes

2. No

3. Sometimes

4. Only for management

The correct answer is: No

Salaries of support staff are considered indirect labor costs rather than direct labor costs. Direct labor costs specifically refer to the expenses associated with workers who are directly involved in the production of goods or services—typically, this includes wages for employees who physically create products or deliver core services. Support staff, such as administrative personnel, janitors, or human resources, contribute to the operations of the business but do not directly generate revenue from the production of goods or services. Therefore, their salaries are classified as overhead or indirect costs rather than direct labor costs. This ensures that a company can accurately allocate production costs and monitor profitability associated with its primary operations.