Which cost is categorized as indirect labor cost?

Indirect labor costs refer to expenses associated with employees who support the production process but do not directly contribute to the creation of the product. Employee health insurance and taxes fall into this category because they are not wages paid for specific labor performed, but rather benefits and obligations related to employment. These costs are necessary to maintain the workforce, but they do not directly correlate with the time or effort spent in making food or interacting with customers in a direct way.

In contrast, wages for chefs and cooks are considered direct labor costs, as they are directly tied to the food preparation process. Supplies used in food preparation are categorized as direct material costs, while commissions paid to sales staff are associated with sales and marketing functions, not production labor. Therefore, employee health insurance and taxes are best classified as indirect labor costs, as they support the workforce in a more general capacity.