Discuss, with reasons, whether or not you agree with the Production Director’s view that the direct labour expense is a fixed manufacturing overhead cost.

I do not agree with the Production Director’s view that the direct labour expense is a fixed manufacturing overhead cost. This is because labour costs are typically classified as either variable or fixed depending on whether they vary with changes in production volume. In other words, if an increase in production results in an increase in labour costs then it would be considered a variable cost; however, if the same level of production can still be achieved even when there are changes in labour costs then it would be seen as a fixed cost.

In this case, since direct labor expenses are directly related to output levels and cannot remain constant regardless of how much is produced, I believe they should not be considered a fixed manufacturing overhead cost. Furthermore, even though these expenses may remain relatively stable over time due to factors such as union contracts or wages being set for long periods of time, their true nature still remains that of a variable cost since any fluctuations will have an effect on total output levels.