CIMA P1 Syllabus C. Short-term Decision Making - Relevant Cost of Labour - Notes ^{3 / 4}

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