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AmaaCompany Ltd. has a new project that will require three types of labour as follows: Type of labour Hours required Skilled 6,000 Unskilled 9,000 Quasi-skilled
AmaaCompany Ltd. has a new project that will require three types of labour as follows:
Type of labour | Hours required |
Skilled | 6,000 |
Unskilled | 9,000 |
Quasi-skilled | 1,500 |
Notes:
- Skilled labour is paid at GHS37.50 per hour. There is a severe shortage of employees with these skills and the only way that this labour can be provided for the new project would be for the company to move employees away from making Product okoto. A unit of Product okoto takes 4 hours to make and makes a contribution of GHS60 per unit.
- Unskilled labour is paid at GHS20 per hour and existing staff are fully utilised. The company will hire new staff to meet this additional demand.
- Quasi-skilled labour is paid at GHS24 per hour. These employees are difficult to recruit and the company retains a number of permanently employed staff, even if there is no work to do. There is currently 800 hours of idle time available and any additional hours would be fulfilled by temporary staff that would be paid at GHS35 per hour.
Required:
What is the relevant cost of the labour hours required for the new project?
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