Direct Labor Budget, as the word suggests, relates to the cost of direct labor involved in production/assembly or service. It allows a company to manage the labor force it needs. https://efinancemanagement.com/budgeting/direct-labor-budget

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https://efinancemanagement.com/budgeting/direct-labor-budget
Direct Labor Budget

2. 1. Meaning
2. How to Calculate Direct Labor Cost?
3. Benefits
4. Drawbacks
5. Reference
Content

3. Direct Labor Budget, as the word suggests, relates to the cost of direct labor involved in production/assembly or service.
It allows a company to manage the labor force it needs.
A direct labor budget is a part of the master cost or finance budget. A company prepares this budget after finalizing the
production budget.
Meaning

4. To calculate direct labor cost, follow the simple steps:
1. Estimate the total labor hours required to achieve the planned production.
2. Multiply the total labor hours with the estimated cost per Direct Labor Hour.
It will give budgeted direct labor cost.
How to Calculate Direct Labor Cost?

5. Following are the benefits of direct labor budget:
• Help management to identify labor shortage & make necessary adjustments in time to avoid any production
disruption.
• Helps management to schedule plant shutdowns for maintenance purposes.
• Helps the management to schedule delivery of the products to the customers.
• Helps in determining the selling price of the product.
Benefits

6. Following are the drawbacks of direct labor budget:
• Don’t take cash requirements in the calculation.
• If there are many categories of direct labor, preparing a budget takes too much time & becomes a complex process.
• Actual payment to the labor would depend upon many current macro and micro factors in real world.
Drawbacks

7. Reference
To know more about it, click on the link given below:
https://efinancemanagement.com/budgeting/direct-labor-budget