A company is considering accepting a one-year contract which will require four skilled employees. The four skilled employees could be recruited on a one-year contract at a cost of £40 000, per employee. The employees would be supervised by an existing manager who earns £60 000 per annum. It is expected that super-vision of the contract would take 10% of the manager’s time.
Instead of recruiting new employees, the company could retrain some existing employees who currently earn £30 000 per year. The training would cost £15 000 in total. If these employees were used they would need to be replaced at a total cost of £100 000.
The relevant labour cost of the contract is:
|
A |
£100 000 |
|
B |
£115000 |
|
C |
£135 000 |
|
D |
£141000 |
|
E |
£166 000 |
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