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The elements of the cost of sales are materials costs, labor costs, overhead costs, indirect materials costs and indirect labor costs.

Indirect labor costs include manufacturing maintenance personnel, management and and sub-contracted work.

The institute’s study estimated the direct and indirect labor requirements of production in 195 industries, of which 77 were in manufacturing.

Clients have put pressure on agencies to decrease margins, so the indirect labor isn’t billed to clients.

Even though we supplied the material--typically dyed wool or dyed Orlon acrylic--the cost of direct and indirect labor was only about 16% of the final wholesale price of the garment.