- This topic has 5 replies, 3 voices, and was last updated 13 years ago by
.
- Posts
stay clean dec 09
All the direct labour currently working on the TD will be made redundant immediately if TD is ceased now. This would cost $6000 in redundancy payments.
The supervisor(currently classed a an overhead) supervise the production of all 3 products spending approximately 20% of his time on the Td production. He would continue to be fully employed if the TD ceases to be produced now.in their solution,
$6000 is relevant cost. supervisor salary is not relevant cost.I dont understand why they are taking labour redunancy cost as relevant cost.
Hi there,
$6000 is relevant because if TD is ceased now, the company would have to pay redundancy payment that is $6000; hence it’s to be taken into consideration if the company decides to cease producing TD.
Supervisor cost is irrelevant because irrespective of the cessation of TD, the supervisor will continue working, hence irrelevant.
whether TD ceases or not, company has to pay $6000. am i right?
supervisor salary is fixed. other labour fee is committed, then how it is relevant. i still dont get it.
You’ve not read the question properly. Just relax and re-read the question. Your answers lies in these 2 statements.
“All the direct labour currently working on the TD will be made redundant immediately if TD is ceased now. This would cost $6000 in redundancy payments.”
“The supervisor(currently classed a an overhead) supervise the production of all 3 products spending approximately 20% of his time on the Td production. He would continue to be fully employed if the TD ceases to be produced now.”
i got it. , thanks. i was confused the word redundant, it means they will be dismissed , right. i was thinking they will paid unnecessary since they are idle.
- You must be logged in to reply to this topic.