Doire Teoranta needs to upgrade its payroll system. The management accountant has produced a report showing the
Question:
Doire Teoranta needs to upgrade its payroll system. The management accountant has produced a report showing the costs related to undertaking this project in-house. The report sets out the costs as follows:
Cost | € |
Direct labour (100 hours) | 20,000 |
Variable overheads | 2,448 |
IT Director – 10% of time | 3,000 |
Direct Materials | 793 |
Fixed Overheads | 3,729 |
|
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You are advised that the direct labour hours relate to employees currently working for Doire Teoranta who are currently under-utilised and have the spare capacity to undertake this project. If the project is outsourced, they would still continue to be employed by the company. Similarly, the IT director has the capacity to supervise this project without impacting on any other jobs.
On the basis of the information provided what is the relevant cost of completing this project in-house?
Project Management in Practice
ISBN: 978-0470533017
4th edition
Authors: Samuel J. Mantel Jr., Jack R. Meredith, Sco