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in the example 3,1 the solution shows the incremental in cost labour cost is (1000*2.14)+(4000*3.5) how it caluclat 1000 and 4000
The currently produce 35000 units (see first line of the solution).
Note (b) of the question says that they have capacity to produce 36000 units using ‘normal’ labour, so they can only make 1000 at normal cost and the extra would cost 3.50 per hour.
Each using takes 1 hour and so for 5000 units, the labour for the first 1000 will be at 2.14 and the extra will be at 3.50.
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