A student accountant is calculating the relevant cost of a new project. As part of the calculation they need to work out the value to be included for labour.

Details of the labour force needed is shown below;

Cost of labour

The company has 5 permanent employees who are on a 35 hour week contract. The employees are expected to come to work even if there is nothing to do. Currently there is spare capacity of 80 hours. If the project goes ahead each employee would be required to work 22 hours on the project.

They are paid 14 an hour with overtime being paid at time and a half.

Required

Is the cost of labour a relevant cost to the new project? Answer 1Choose...YesNo

What is the relevant cost (if any) that would be charged to the project for labour? Answer 2