Salary and oncosts of driver Â£16,000
Salary and oncosts of builder who
covers for sickness and annual leave
absences of driver Â£2,800
Depreciation of vehicle Â£2,500
Road tax, insurance & servicing Â£1,000
If Cowboy uses Select Couriers, it will sell the vehicle for Â£2,000, and the driverâ€™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 Â£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?