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Hi,
Can you please help me understand the below question?
the installation is expected to take one week to complete and would require three engineers, each of whom is paid a monthly salary of $4000.The engineers have just had their annually renewable contract renewed with T co. One of three engineers has spare capacity to complete the work but the other two would have to be moved from contract x in order to complete this one. Contract X generates a contribution of 200$ per engineer per week. There are no engineers available to continue with Contract X if these two engineers are taken off the job.it would mean that T co would miss its contractual completion deadline on Contract X by one week. As a result, T co would have to pay a one-off penalty of 500$.Since there is no other work scheduled for their engineers in one week’s time, it will not be a problem for them to complete contract x at this point.
The question asks to: What figure should be included in the relevant cost statement for engineers’ cost?
The answer in the textbook is $500.
My question is why isn’t the VC and the opportunity cost of contribution foregone not included aswell?
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