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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

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