VV Company has been asked to quote for a special contract. The contract requires?100 hours of labour. However, the labourers, who are each paid $15 per hour, are working?at full capacity.??
There is a shortage of labour in the market. The labour required to undertake this special?contract would have to be taken from another contract, Z, which currently utilises?500 hours of labour and generates $5,000 worth of contribution.???
If the labour was taken from contract Z, then the whole of contract Z would have to be?delayed, and such delay would invoke a penalty fee of $1,000.?
What is the relevant cost of the labour for the special contract??