Like material cost, labour also forms a significant part of cost of production. Therefore, it is essential that there should be proper and effective control over labour cost. Labour cost control will, in effect, lead to minimization of cost of labour per unit of output. This is more so when labour cost is of fixed nature. In India, a major part of labour cost is fixed and not variable. Accordingly, an increase in output, other things remaining constant, for a given amount of labour cost will not only result in lower unit cost of labour but that of overhead. This will also result in lower average cost. Conversely, output remaining constant, any reduction in the amount of total labour cost will also result in lower cost per unit. In this paper Management of Labour Cost is discussed with special reference to methods of remuneration.

Keywords: Labour Cost, Overhead, Average Cost, Methods of Remuneration.