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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 Preview

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

    Solution Summary

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

    $2.49

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