Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Relevant Costing
- This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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- February 28, 2017 at 5:12 pm #374780
Sorry John, could I please run the below scenario past you?
‘A future contract requires workers, who are currently working at full capacity, to be moved temporarily, to take on a future contract.
Workers are moved for one week, from their original project schedules, in order to take on a future/proposed contract. However, workers can then return to the original project, the next week, complete the project and recover the contribution deferred during their redeployment for the proposed contract.’
1) In such a case, is it right that there is no opportunity cost because the workers are able to resume their original work, make the intended output, and so the contribution was deferred not foregone?
2) Further, if workers can resume to their old work the next week, does that mean, without BOTH the original work and proposed contract their would have been spare capacity and so we shouldn’t charge the labour hours because there was spare capacity/no opportunity cost of using the labour?
2) If the scenario has been different and whilst the workers were redeployed, the company lost sales on the original project that workers were assigned to (before being reallocated to another contract) then we would charge the opportunity cost of the lost contribution and charge the labour because it was a result of its scarce supply and redeployment that the contribution was lost for that period?
I’m really sorry my questions are so long-winded/not clear.
February 28, 2017 at 5:33 pm #3747931 Correct
2 Correct
3 Correct 🙂
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