The labour requirement for a special contract is 250 skilled labour hours (paid 10 per hour)...

 

Transcribed Image Text:

The labour requirement for a special contract is 250 skilled labour hours (paid 10 per hour) and 750 semi-skilled labour hours (paid 8 per hour). At present skilled labour is in short supply, and all such labour used on this contract will be at the expense of other work which generates 12 contribution per hour (after charging labour costs). There is currently a surplus of 1,200 semi-skilled labour hours, but the company currently has a policy of no redundancies. What is the relevant cost of labour for the special contract? The labour requirement for a special contract is 250 skilled labour hours (paid 10 per hour) and 750 semi-skilled labour hours (paid 8 per hour). At present skilled labour is in short supply, and all such labour used on this contract will be at the expense of other work which generates 12 contribution per hour (after charging labour costs). There is currently a surplus of 1,200 semi-skilled labour hours, but the company currently has a policy of no redundancies. What is the relevant cost of labour for the special contract?

Answer rating: 100% (QA)

To determine the relevant cost of labor for the special contract we need to consider the opportunity ... View the full answer