Relevant cost of Labour

NotesQuizPaper examCBEMock

The key question here is: Is there spare capacity?

Different Scenarios...

  • Spare capacity

    So, additional work can be undertaken at no extra cost :)

    • Relevant cost of labour is a big, fat 0

  • Full capacity - so hire more workers

    • Relevant cost is current pay rates

  • Full capacity - takes workers from another project

    So this project can't be finished :( - so we lose its contribution but we still have to pay the workers on our project

    • Relevant cost is Lost contribution + labour cost

Capacity
NotesQuizPaper examCBEMock