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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › relevant costing-direct labour
“100 hours of unskilled labour currently paid at $5.5 per hour are needed for a contract. Z co. has no surplus capacity at the moment, but additional temporary staff could be hired at $6.5 per hour.”
The correct answer is: $650
Sir now my only doubt in this question is we have not been given contribution lost per direct labour hour, if it would have been less than $1 than transferring the workers would have been a better choice but if contribution lost per direct labour hour was more than $1 then hiring additional workers would’ve been a saner choice.
so how do we decided when complete information is not given?
many thanks as always!
Although what you write is true, you cannot assume that they are prepared to give up existing work unless the question says so. You have to make the most sensible use of the information provided.