CG Co manufactures a single product T. Budgeted production output of product T during June is 200 units. Each unit of product T requires 6 labour hours for completion and CG Co anticipates 20 per cent idle time. Labour is paid at a rate of Rs7 per hour. The direct labour cost budget for March is

The correct answer is: C. Rs. 10080

The direct labor cost budget for March is calculated as follows:

• Budgeted production output of product T during March = 200 units
• Each unit of product T requires 6 labor hours for completion = 6 hours/unit
• CG Co anticipates 20 per cent idle time = 20%
• Labor is paid at a rate of Rs7 per hour = Rs7/hour

Therefore, the direct labor cost budget for March is:

• Budgeted production output of product T during March x Hours per unit x (1 – Idle time%) x Labor rate per hour = 200 units x 6 hours/unit x (1 – 20%) x Rs7/hour = Rs10080

Option A is incorrect because it does not take into account the idle time. Option B is incorrect because it does not take into account the labor rate. Option D is incorrect because it does not take into account the production output.