- This topic has 2 replies, 2 voices, and was last updated 4 years ago by
.
Viewing 3 posts - 1 through 3 (of 3 total)
- Posts
In Chapter Nine, Illustration 7.
I am unable to understand why labor cost is deducted? I got my answer till 2000 but have not subtracted labor cost of 30000.It is because the contribution foregone figure is based on losing sales but also not incurring material, labour or variable overheads ( contribution = sales less variable costs). However, here we do not lose labour, we move employees across and still have to pay them. The labour cost is therefore a correction to the effect of the contribution foregone.
Viewing 3 posts - 1 through 3 (of 3 total)
- The topic ‘Open tuition Notes’ is closed to new replies.