Accepting Business at a Specia

timer Asked: Dec 2nd, 2015

Question description

Accepting Business at a Special Price

Power Serve Company expects to operate at 82% of productive capacity during May. The total manufacturing costs for May for the production of 30,340 batteries are budgeted as follows:

Direct materials$458,000
Direct labor168,400
Variable factory overhead47,148
Fixed factory overhead94,000
Total manufacturing costs$767,548

The company has an opportunity to submit a bid for 3,000 batteries to be delivered by May 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during May or increase the selling or administrative expenses.

What is the unit cost below which Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.

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