Determine the relevant costs, Cost Accounting

Cowboy Constructions employs a full-time driver and incurs costs for a vehicle to deliver paperwork between each of their building sites. Select Couriers has offered to carry out the work to the same standard of service for a fixed sum of £2,000 per month. Cowboy’s annual costs are currently:

Salary and oncosts of driver                 £16,000
covers for sickness and annual leave
absences of driver                               £2,800
Depreciation of vehicle                         £2,500
Road tax, insurance & servicing             £1,000
Fuel                                                    £3,000
Total                                                   £25,300


If Cowboy uses Select Couriers, it will sell the vehicle for £2,000, and the driver’s employment will be terminated without any redundancy payment. The builder who covers for sickness and leave of the driver is currently replaced by casual labour which costs £3,500.

What are the relevant costs involved in this decision? Should Cowboy sub-contract its delivery requirements to Select? What considerations are there in making this decision?

Posted Date: 2/18/2013 8:21:32 AM | Location : United States





I need homework help, please.
Posted by Shan | Posted Date: 7/7/2013 4:53:58 PM


Related Discussions:- Determine the relevant costs, Assignment Help, Ask Question on Determine the relevant costs, Get Answer, Expert's Help, Determine the relevant costs Discussions

Write discussion on Determine the relevant costs
Your posts are moderated
Related Questions
What do you mean by differential costing ? How it differ from marginal costing ? explain its practical application with examples?

The owner of the Hughes Car Wash believes that the relationship between the number of cars washed and the amount of labor employed is Q = 0.8 + 4.5 L - 0.3 L2 where Q = the num

Gustav Ltd commenced operations on 1 July 2011 and presents its first statement of comprehensive income for the year ending 30 June 2012 and first statement of financial position a

Traditional budgeting  systems are  incremental  in nature and  tend  to  focus on  cost  centres.  Activity-based  budgeting  links  business  planning  to  the  budgeting  proces

Peter Coffin and Paul Bearer own The Grave Undertaking, Inc. and their firm uses a predetermined overhead rate to apply overhead to the production of custom-built coffins.  They us

distinguish between bin card and store ledgre

Semi Variable Costs Are costs along with both a fixed and variable cost component? The fixed component is such portion that is constant irrespective of the level of activity.

Direct Labour Rate Variance It is the difference among the actual direct labour rate and the standard direct labour rate for the total hours worked. Utilizing an equation,

Important Points Regarding to the Variance Analysis Variance reporting concentrates on both with favourable and unfavourable variances. Normally unfavourable variances are pun

Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years. The equipment will generate cash flows of $7,000 per year and will have no salvage value a