Please show complete solution Hyfer Co. is considering a project to produce a one-off run of products for a customer. They can employ non-skilled staff at short notice who are paid P8 per hour and are not currently needed elsewhere in the business. The production run will also use skilled labor who are currently employed on another project which creates a contribution of P35 per hour for the business. The skilled labor are paid P20 perhour. The production run will take: 500 hours of unskilled labor. 200 hours of skilled labor. 1.) What is the relevant cost of labor for inclusion in the evaluation of the project by ABC? 2.) If the unskilled labor was employed by ABC on contract guaranteeing them work for the 500 hours in any area of the factory then what would the labor cost be?
Please show complete solution
Hyfer Co. is considering a project to produce a one-off run of products for a customer.
They can employ non-skilled staff at short notice who are paid P8 per hour and are not currently
needed elsewhere in the business. The production run will also use skilled labor who are currently
employed on another project which creates a contribution of P35 per hour for the business. The
skilled labor are paid P20 perhour.
The production run will take:
500 hours of unskilled labor.
200 hours of skilled labor.
1.) What is the relevant cost of labor for inclusion in the evaluation of the project by ABC?
2.) If the unskilled labor was employed by ABC on contract guaranteeing them work for the
500 hours in any area of the factory then what would the labor cost be?
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