Final answer:
Direct labor costs are wages paid to workers directly engaged in the production of goods or services, which does not include janitor wages or accountant salaries. Examples include assembly line workers or machine operators. Living wage concepts impacting direct labor cost via minimum wage policies are only tangentially related.
Step-by-step explanation:
An example of direct labor cost would typically be the wages paid to workers who are directly involved in the production of goods or services. In this case, janitor wages are not considered direct labor costs because janitors do not actively engage in the manufacturing process or delivering services that the business principally provides. Conversely, the accountant salary is also not a direct labor cost; accountants provide administrative support that is essential but not directly tied to the production process. Instead, direct labor costs could include salaries for assembly line workers, craftsmen, or machine operators who are instrumental in producing the company's products.
Considering the concept of a living wage and price floors in the labor market, if a wage floor is imposed above the equilibrium wage, such as increasing it from $10 to $12 per hour, it can lead to an excess supply of labor. This situation is depicted in the scenario where at a $12 wage, more workers (1,600) are willing to work, while fewer jobs (700) are available, resulting in an excess supply of 900 jobs. This outcome is tangentially related to direct labor costs as it reflects how wages can be artificially altered through policy, impacting the cost structure for businesses and possibly changing the dynamics of what constitutes direct versus indirect labor costs.