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37. Data: A company has just secured a new contract which requires 500 hours of labour. There are 400 hours of spare labour capacity. The
37. Data: A company has just secured a new contract which requires 500 hours of labour. There are 400 hours of spare labour capacity. The remaining hours could be worked as overtime at a rate of 1.5 times the normal labour cost, or labour could be diverted from the production of product X. Product X currently earns a contribution of $4 in two labours hours and direct labour is currently paid at a rate of $12 per normal hour. Question: What is the relevant cost of labour for the contract in case the company chooses to work overtime rather than diverting production from product X? A) $9.000 B) $1,800 C) $4.000 D) $7,800
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