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All of a company’s skilled labour, which is paid £8 per hour, is fully employed manufacturing a product to which the
following data refer:
                                                   £ per unit                        £ per unit
Selling price                                                                             60
Less Variable costs:
Less Skilled labour                           20
Less Others                                     15
                                                      –––
                                                                                               (35)
                                                                                             –––
Contribution                                                                             25
                                                                                             –––
The company is evaluating a contract which requires 90 skilled labour hours to complete. No other supplies of skilled
labour are available.
What is the total relevant skilled labour cost of the contract?
A   £720
B   £900
C   £1,620
D   £2,160

C

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