Henderson Manufacturing Inc Henderson Manufacturing Inc manufactures electric scooters. The company currently makes all of the electronic components for the scooter itself. When 10,000 motors are manufactured each year, the motor costs per unit are as follows: Direct materials $5 Direct labor 5 Variable overhead 2 Fixed overhead 7 Plymouth Inc has offered to sell Henderson 10,000 motors for $14
per unit. If Henderson accepts the offer, 50% of the fixed overhead currently allocated to the motors could be avoided. Refer to the Henderson Manufacturing Inc information above. What are the relevant costs per unit of Henderson manufacturing the motors themselves?
A) $15.50
B) $15.20
C) $19.00
D) $14.00
A
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