=+includes the 16 hours of set-up labour at $25 per hour that is incorrectly included as part of direct manufacturing labour costs.

You may also want to know that over 40% of the direct materials is purchased from Frontier Technology, a company that is 51%

owned by Jack Halpern’s brother. For obvious reasons, this letter will not be signed.

cc: The Australian, Jack Halpern, CEO of Aerospace Comfort Aerospace Comfort’s contract states that the RAAF reimburses Aerospace Comfort at 130% of total manufacturing costs. Assume that the facts in the letter are correct as you answer the following questions.

Required 1 What is the cost amount per X7 seat that Aerospace Comfort billed the RAAF? Assume that the actual direct materials costs were

$25000.