Mathematics · Cost Accounting
A contract is under consideration which requires 600 labour hours to complete. There are 350 hours of spare labour capacity. The remaining hours for the contract can be found either by weekend overtime working paid double the normal rate of pay or by diverting labour from the manufacture of product QZ. If the contract is undertaken and labour is diverted, sales of product QZ will be lost. Product QZ takes three labour hours per unit to manufacture and makes a contribution of $12 per unit. The normal rate of pay for labour is $9 per hour. What is the total relevant cost of labour for the contract?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$4,500
- 2$3,250✓
- 3$2,250
- 4$1,000
Correct answer
$3,250
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