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In a services-only company, how would you classify labor on an income statement?


I am the founder of a company that is about to go live into public markets, and we are a services-only company. In constructing either a financial forecasting sheet or an income statement, would I classify our employee labor as being a direct labor cost, deducted from Total Revenue, since we do not make a physical product (our product is our services as a company)? Or would we classify labor as a Fixed Expense to be deducted from Contribution Margin?

538 day(s) ago

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alohachris 		It would be just a direct labor cost/wage expense. It's not a fixed expense since labor expenses paid will go up and down in relation to the level of activity/services provided by the company.
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I think you are kind of mixing up or mixing together managerial and financial accounting. Which isn't a really big deal. But they ARE separate things used for different purposes.

Posted 538 days ago

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