Budgeting Basics and Beyond

6.7. Direct Labor Budget

The production requirements as set forth in the production budget also provide the starting point for the preparation of the direct labor budget. To compute direct labor requirements, expected production volume for each period is multiplied by the number of direct labor hours required to produce a single unit. The direct labor hours to meet production requirements is then multiplied by the (standard) direct labor cost per hour to obtain budgeted total direct labor costs.

Schedule 4

Table 6.4. THE PUTNAM COMPANY Direct Labor Budget For the Year Ended December 31, 20B

Quarter
	1	2	3	4	Year as a Whole
Units to be produced (Sch. 2)	980	1,820	1,920	1,380	6,100
Direct labor hours per unit[]	× 5	× 5	× 5	× 5	× 5
Total hours	4,900	9,100	9,600	6,900	30,500
Direct labor cost per hour[]	× $10	× $10	× $10	× $10	× $10
Total direct labor cost	$49,000	$91,000	$96,000	$69,000	$305,000
[]

^[] Both are given.