When calculating the direct labor budget,the starting point should be:
A)actual direct labor hours from the previous year.
B)budgeted sales.
C)budgeted production.
D)budgeted cost of direct labor.

Question

Quizplus · Accepted Answer

The direct labor budget should start with the budgeted production, since the amount of labor needed will depend on the level of production. Once the production level is determined, then the direct labor hours and cost can be calculated. Starting with actual direct labor hours from the previous year or budgeted sales would not provide an accurate starting point for the direct labor budget. Budgeted cost of direct labor should be calculated after the direct labor hours are determined.

When Calculating the Direct Labor Budget,the Starting Point Should Be