Question: A company is considering accepting a one-year contract, which will require four skilled employees. The company could retrain four of its existing employees who currently

A company is considering accepting a one-year contract, which will require four skilled employees. The company could retrain four of its existing employees who currently earn £30,000 each per year. The training would cost £15,000 in total. If these employees were to work on this contract, they would need to be replaced for the duration of the contract at a total cost of £100,000. The trained employees would be supervised by an existing manager who earns £60,000 per year. It is expected that supervision of the contract would take 10% of the manager’s time.

What is the relevant labour cost of accepting the contract?

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