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find the variable cost of an airplane

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Tom Terry manufactures an intricately detailed plastic and metal toy airplane. The following unit cost data pertain to the unit cost of an airplane:

Direct materials $ 5.00
Direct labor 12.00
Manufacturing overhead (50% fixed) 10.00
Total manufacturing costs $27.00
Please show work:

Assume that the airplane can be purchased from an outside supplier. What is the relevant unit cost for this make-or-buy decision?
a. $5
b. $17
c. $27
d. $22
e. none of the above. Please provide the correct answer.

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Solution Summary

What is the relevant unit cost for this make-or-buy decision?

Solution Preview

d. $22
<br>Actually we are to find the variable cost of an ...

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