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Direct Labour: The workforce is paid on a time basis. The company has a policy of avoiding redundancies and this means that skilled workers are frequently moved to jobs which do not make proper use of their skills. The wages included in the cost estimate: 700 hours of skilled labour at $3.5 hour $2450, 1500 hours of unskilled labour at $2 hour $3000, are for the mix of labour which the job ideally requires. It seems likely, if the job is obtained, that most of the 2200 hours of direct labour will be performed by skilled staff receiving $3.5 an hour. Sir, can you tell me what it is the relevant cost of labour and the reason for your answer.
There is not enough information to be able to answer.
If the skilled staff currently have plenty of idle time then the relevant cost would be zero. If on the other hand they are being moved from other work, then we need to know what contribution per hour is being earned from the work they are currently doing.
I assume that you have watched the free lectures on relevant costing?
(Also, if you have the question, presumably you have an answer in the same book. You should ask about problems you have with the answer rather than expect a complete solution to be provided!)
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