Direct labor budget
In one sentenceA plan of the direct labor hours needed to carry out planned production and their cost, built on the number of units, time per unit, and hourly wage.
Simply put
Multiply the number of units planned for production by the standard time per unit to get the required hours, then multiply them by the hourly wage.
It helps you know whether the current number of workers is enough, or whether you need extra labor or overtime.
Worked example
The same factory plans to produce 5,000 bottles. Each bottle needs half an hour of work, and the hourly wage is 40 SAR.
Hours needed5,000 × 0.5 = 2,500 hours
Hourly wage40 SAR
Direct labor budget2,500 × 40 = 100,000 SAR
Formula: Production units × hours per unit × hourly wage
Don't confuse it with
Labor efficiency varianceThe budget is the plan before production; the variance measures the difference between actual and planned hours after it.