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ACCA Applied Knowledge · Management Accounting · Accounting for material, labour and overheads

Which of the following is a preventable cost of labour turnover?

Paying higher wages than would otherwise be necessary to keep staff is a preventive cost, because it is incurred to stop employees leaving. Recruitment, training and lost output from learning curves are replacement costs that arise after someone has left.

  1. ACost of recruiting replacement staff after a retirement
  2. BCost of lost output while a new starter learns the job
  3. CCost of paying higher wages to retain staff than would otherwise be neededCorrect
  4. DCost of training replacement staff after an employee emigrates

Explanation

Preventable costs arise from avoidable leaving, and paying higher wages or improving conditions to retain staff is a cost of preventing turnover. Recruitment, training and lost output are replacement costs arising from leavers, so the other options are not preventive costs.

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