CIMA Exam CIMAPRO19-P01-1 Topic 10 Question 73 Discussion

The labour requirement for a special contract is 250 skilled labour hours paid at $10 per hour and 750 semi-skilled labour hours paid at $8 per hour.

At present, skilled labour is fully utilised on other contracts which generate a $12 contribution per hour, after charging labour costs. Additional skilled labour is unavailable in the short term.

There is a surplus of 1,200 semi-skilled hours over the period of the contract but the firm has a policy of no redundancies.

The relevant cost of labour for the special contract is: