Question: A company is currently preparing a quotation for a new contract which will require 120 labour hours per week over the next six weeks. Due

A company is currently preparing a quotation for a new contract which will require 120 labour hours per week over the next six weeks.

Due to labour being in short supply, two scenarios are under consideration:

(1) To pay existing staff an overtime premium of 20% for the duration of the contract. Existing staff are currently paid 30 per hour.

(2) To recruit labour on a temporary basis for the contract duration. The rate per labour hour will be 35.

What is the relevant cost of skilled labour to the company for this new contract?

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