5. Power Systems Inc. manufactures jet engines for the United States armed forces on a cost-plus basis. The production cost of a particular jet engine is shown below: Direct materials ............... Direct labor............ Manufacturing overhead: Supervisor's salary................... Fringe benefits on direct labor.... Depreciation....... Rent.......... Total cost. $200,000 150,000 A. $408,000 B. $365,000 C. $397,000 D. $385,000 20,000 15,000 12,000 11,000 $408,000 If production of this engine was discontinued, the production capacity would be idle, and the supervisor would be laid off. The depreciation referred to above is for special equipment that would have no resale value and that does not wear out through use. The company cannot get out of its lease. When asked to bid on the next contract for this engine, the minimum unit price that Power Systems should bid is:

5. Power Systems Inc. manufactures jet engines for the United States armed forces on a cost-plus basis. The production cost of a particular jet engine is shown below: If production of this engine was discontinued, the production capacity would be idle, and the supervisor would be laid off. The depreciation referred to above is for special equipment that would have no resale value and that does not wear out throwgh use. The company cannot get out of its lease. When asked to bid on the next contract for this engine, the minimum unit price that Power Systems should bid is: A. $408,000 B. $365,000 C. $397,000 D. $385,000