Option 4 is correct
No matter if they are contracts or wages, labour costs are always part of the operating costs of a business. As a result, they will always be pertinent for operational choices.
What is meant by labour cost ?
- What a company pays its employees to create one unit of output is known as the unit labour cost (ULC). Businesses compensate their employees, which may consist of salary and perks like health insurance and retirement contributions.
- The hourly wage of a quality assurance inspector adjusted to incorporate healthcare benefits and short-term disability is one illustration of a direct labour cost.
- The annual wage of a welder who works on the production line of a business that makes steel parts may serve as another illustration.
- Any business executive is aware that one of the biggest expenses is labor. Up to 70% of a company's total expenses can be attributed to labor, which includes employee salaries, benefits, payroll taxes, and other related costs.
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