Direct Labor is labor that converts direct materils into the finished product and can
be-assigned feasibly to a specific product. In highly automated factories, two problems
often arise when an attempt is made to identify direct labor as a separate cost element.
First, the same workers perform many kinds of tasks. They may shift between direct
labor tasks and indirect labor tasks so quickly and so frequently that direct and indirect
labor costs are difficult or impossible to separate. Second, direct labor may be a trivial
fraction of total production costs, making it difficult to justify identifying direct labor as
a separate cost element. In settings in which one or both of these circumstances exist, a
single conversion cost classification is appropriate, ,leaving direct material as the only
cost element traced directly to the product.