Labor cost can appear variable in product costing because it is entered based on labor hours, but in investment evaluation it must be treated as a fixed cost unless headcount changes. This post explains why the distinction matters and how to structure it.

Costing must follow the production reality. In one‑off projects, labor drives value → use labor‑hour costing. In mass production, machines drive value → use machine‑hour costing. In foundries, use the pouring machine hours and actual good units to calculate true unit cost.