Skip main navigation

The Direct Labour Budget

Learn more about the direct labour budget.

The Direct Labour Budget

  • At Royal, each unit of product requires 0.05 hours (3 minutes) of direct labour.
  • The Company has a “no layoff” policy so all employees will be paid for 40 hours of work each week.
  • Workers are paid at the rate of $10 per hour regardless of the hours worked.
  • For the next three months, the direct labour workforce will be paid for a minimum of 1,500 hours per month.

Example

Units of production: April 26k, May 46k, June 29k, Q 101k. Direct labour per unit: April 0.05, May 0.05, June 0.05, Q 0.05. Labour hours required: April 1.3k, May 2.3k, June 1.45k, Q 5.050. Guaranteed labour hours: April 1.5k, May 1.5k June 1.5k Q 0. Hourly wage rate: April $10, May $10, June $10, Q $10. Total direct labour costs: April $15k, May$23k, June $15k, Q $53k

Over to you

Remember to take some time to reflect on what you have learnt.

This article is from the free online

Accounting for Today’s Dynamic World

Created by
FutureLearn - Learning For Life

Reach your personal and professional goals

Unlock access to hundreds of expert online courses and degrees from top universities and educators to gain accredited qualifications and professional CV-building certificates.

Join over 18 million learners to launch, switch or build upon your career, all at your own pace, across a wide range of topic areas.

Start Learning now