Direct Labour cost

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May 2, 2017 at 3:58 pm #384590
anjalir
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A company manufactures a single product M. Budgeted production output is 200 units. Each unit of M requires labour hours for completion and the company anticipates 20 per cent idle time. Labour is paid at a rate of $7 per hour. What is the direct labour cost budget?
Solution
200 x 6= 1200
1200/0.8 = 1500
1500 x 7 = 10500
Is it correct Sir? I did it right ? Sorry for bothering you, I know it’s an easy one! I got a test & I don’t have the answer. Thank you.
May 2, 2017 at 5:57 pm #384606
John Moffat
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I think you missed out part of the question 🙂
Assuming that each unit requires 6 hours of labour for completion, then your answer is correct.
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