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John Moffat.
John Moffat.-
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yuliav
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Hi,
I have done 20 questions test on your website. There is a question about relevant costing, unfortunately I could not copy and paste it but I will describe it the best I can:
The company has been offered a contract, which requires 5000 hrs of labour. The labour is currently working on another contract generating contribution of £12. There is lot of idle time, labour is paid £8 per hour. What is the relevant labour cost for the contract?
I believe that cost should be zero as there is some spare capacity, which is an idle time. However the correct answer is £40,000.
Please could you explain why?
John Moffat
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Sorry, it is an error and the answer should be zero. The test has now been corrected.
Thank you for pointing it out.(Incidentally, because the questions are selected at random from a large bank of questions, do try the test a few times – you are likely to get different questions each time 🙂 )
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