Relevant labour cost
Relevant labour cost is the future labour consequence that changes with a decision. If additional labour must be hired or overtime paid, the extra payment matters. If existing staff are paid regardless and have spare capacity, their unchanged basic wage may not be incremental. If scarce staff must be diverted, include the benefit forgone from their best alternative work. Consider skills, legal commitments, fatigue and quality as well as the arithmetic.
Worked example
An order needs 20 overtime hours at an extra $18 per hour, giving $360 additional cash cost. If it also displaces another job, assess that separate consequence.
Common mistake
An hourly wage rate is not automatically a relevant cost when the wage will be paid unchanged under every option.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |
