Page 149 - Microsoft Word - 00 Prelims.docx

Relevant costing

Relevant cost of labour

Labour

Spare capacity Full capacity

Can hire more Can’t hire more
Relevant cost = $nil labour, i.e. take on labour
extra staff or pay

overtime

Relevant cost =

opportunity cost of
Relevant cost = diverting labour, i.e.

extra cost of labour lost contribution
AND extra labour
cost

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