Direct labour budget
A direct labour budget estimates the productive labour time and remuneration required for planned output. Use standard time per unit, then account for idle time, overtime, staffing constraints and applicable rates as specified. Productive hours differ from paid hours if an idle-time allowance applies. The budget should coordinate with production capacity and labour availability rather than simply multiply sales by an hourly rate.
Worked example
Output requires 900 productive hours. If productive time is 90% of paid time, budget 900 ÷ 0.90 = 1,000 paid hours; at $18 per hour basic pay is $18,000.
Common mistake
Do not add 10% to 900 when 10% of paid time is idle; the correct paid-hours denominator is 90%.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| ACCA | PM | Supporting | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |