Page 60 - MAC4861_2 Costing class slides part 2

DECISION MAKING
Relevant Cost Of Labour

• Not relevant if labour force is already working within the

organisation and they are paid irrespective of the

decision taken (i.e. the cost is not avoidable).

• Relevant if the labour force is only paid as a result of the

decision (i.e. the cost is avoidable). Examples: overtime,

casual labour or new labourers employed as a direct

results of the decision.

• Relevant if labour is in short supply.

• Relevant if the labour force could be put to an alternative

use (opportunity cost).

60