Scribd Logo
Upload

Welcome to Scribd!

  • 267 views

    Topic 8: The Direct Labour Budget

    Uploaded by

    fitriawasilatulastifah
    The direct labor budget plans payment details for laborers in the next period. It includes direct labor hour and cost budgets. [1] The direct labor hour budget is calculated as production volume multiplied by standard time per unit. [2] The direct labor cost budget is direct labor hours multiplied by the wage rate. [3] For example, a company producing tomato catsup budgets 95 direct labor hours and £475,000 in direct labor costs for the year based on production and wage rate.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Topic 8: The Direct Labour Budget

    Uploaded by

    fitriawasilatulastifah
    267 views14 pages
    The direct labor budget plans payment details for laborers in the next period. It includes direct labor hour and cost budgets. [1] The direct labor hour budget is calculated as production volume multiplied by standard time per unit. [2] The direct labor cost budget is direct labor hours multiplied by the wage rate. [3] For example, a company producing tomato catsup budgets 95 direct labor hours and £475,000 in direct labor costs for the year based on production and wage rate.

    Original Title

    8. DIRECT LABOUR

    Copyright

    © © All Rights Reserved

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The direct labor budget plans payment details for laborers in the next period. It includes direct labor hour and cost budgets. [1] The direct labor hour budget is calculated as production volume multiplied by standard time per unit. [2] The direct labor cost budget is direct labor hours multiplied by the wage rate. [3] For example, a company producing tomato catsup budgets 95 direct labor hours and £475,000 in direct labor costs for the year based on production and wage rate.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    267 views14 pages

    Topic 8: The Direct Labour Budget

    Uploaded by

    fitriawasilatulastifah
    The direct labor budget plans payment details for laborers in the next period. It includes direct labor hour and cost budgets. [1] The direct labor hour budget is calculated as production volume multiplied by standard time per unit. [2] The direct labor cost budget is direct labor hours multiplied by the wage rate. [3] For example, a company producing tomato catsup budgets 95 direct labor hours and £475,000 in direct labor costs for the year based on production and wage rate.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 14

    TOPIC 8

    THE DIRECT LABOUR BUDGET


    DEFINITION

     Budget which plots in details about


    payment will be paid to labours up to next
    period .
     Labour is divided as:
    – 1. Direct labour
    – 2. Indirect labour
    Remarks :
    – Determine of Direct Labour Hours (DLH)
    – Determine of Direct labour Cost (DLC)
    Formula :
    Direct Labour Hours budget :
    • Production Volume budget X time standart to does
    1 unit product (DLH)
    Direct labour cost budget :
    • Amount DLH X wage rate Per DLH
    Example:
    Tomato Catsup Production Budget of
    Chili Company 2015

    Tomato Catsup
    Quarter (bottles)
    I 220
    II 230
    III 240

    IV 260
     Direct Labouring hour standard to make one
    tomato catsup bottle needs time 0,1 hour and
    direct labouring pay per hour Rp. 5000,-.
     Asked for:
     Make labouring budget for producing that
    tomato catsup, include direct labouring hour
    budget and direct labor cost budget.
    Tomato Catsup of Chili Company
    Direct Labor Hour Budget
    Year 2015
    Using of Direct
    Quarter Production Standard Labor Hour

    I 220 0,1 22 hours

    II 230 0,1 23 hours

    III 240 0,1 24 hours

    IV 260 0,1 25 hours

    A year 95 hours
    Tomato Catsup of Chili Company
    Direct Labor Cost Budget
    Year 2015
    Using of
    direct labor Standard DL cost
    Q (hour) (Rp) (Rp)
    I 22 5000 110.000,-
    II 23 115.000,-
    III 24 120.000,-
    IV 26   130.000,-
    total 95 5000 475.000,-
    Direct Labor Budget

    Example 1
     Production budget also provides the starting point
    for preparing the direct labor cost budget.
     Example: Department 1 has a labor cost of $10
    per hour. Product A uses 6 hours in Department 1
    and Product B uses 4 hours. Department 2 has a
    labor cost of $7 per hours. Production A uses 2
    hours of Department 2’s labor and Product B uses
    ½ hour. Prepare a direct labor budget.
    Example 1
    Department 1 Department 2 Total
    Product A (13,500 units)
    6 hours per unit x 13,500 81,000
    2 hours per unit x 13,500 27,000

    Product B (23,600 units)


    4 hours x 23,600 units 94,400
    ½ hour x 23,600 units 11,800
    Total hours per department 175,400 38,800
    Labor cost per hour X $10 X $7
    Total $1,754,000 $271,600 $2,025,600
    The Direct Labour Budget
    Example
    Example 22
     At
     At Royal,
    Royal, each
    each unit
    unit of
    of product
    product requires
    requires 0.05
    0.05 hours
    hours of
    of direct
    direct
    labour.
    labour.
     The
     The Company
    Company has has aa “no
    “no layoff”
    layoff” policy
    policy so
    so all
    all employees
    employees will
    will
    be
    be paid
    paid for
    for 40
    40 hours
    hours ofof work
    work each
    each week.
    week.
     In
     In exchange
    exchange for for the
    the “no
    “no layoff”
    layoff” policy,
    policy, workers
    workers agreed
    agreed to
    to aa
    wage
    wage rate
    rate of
    of £10
    £10 per
    per hour
    hour regardless
    regardless ofof the
    the hours
    hours worked
    worked (No (No
    overtime
    overtime pay).
    pay).
     For
     For the
    the next
    next three
    three months,
    months, thethe direct
    direct labour
    labour workforce
    workforce will
    will be
    be
    paid
    paid for
    for aa minimum
    minimum of of 1,500
    1,500 hours
    hours per
    per month.
    month.
     Let’s
    Let’s prepare
    prepare thethe direct
    direct labour
    labour budget
    budget..
    The Direct Labour Budget

    From production
    budget
    The Direct Labour Budget
    The Direct Labour Budget

    Higher
    Higher ofof labour
    labour hours
    hours required
    required
    or
    or labour
    labour hours
    hours guaranteed.
    guaranteed.
    The Direct Labour Budget

    You might also like