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A student accountant is calculating the relevant cost of a new project. As part of the calculation they need to work out of the value
A student accountant is calculating the relevant cost of a new project. As part of the calculation they need to work out of the value yo be included for labour. Cost of labour The company has six permanent employees who are on 35 hour werk contract. The employees are expected to come to work even if there is nothing to do. Currently there is no spare capacity. If the project goes ahead, each employee would be required to work 4 hours on the project, Alternatively, the company can hire six agency staff at 16 an hour. Permanent employees are paid 12 an hour with overtime being paid at time and a half. Which cost of labour is relevant cost to the new project? Agency staff or permanent employees? What is the relevant cost of any that would be charged to the project for labour ?
Cost of labour
The company has six permanent employees who are on 35 hour werk contract. The employees are expected to come to work even if there is nothing to do. Currently there is no spare capacity.
If the project goes ahead, each employee would be required to work 4 hours on the project, Alternatively, the company can hire six agency staff at 16 an hour.
Permanent employees are paid 12 an hour with overtime being paid at time and a half.
Which cost of labour is relevant cost to the new project? Agency staff or permanent employees?
What is the relevant cost of any that would be charged to the project for labour ?
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