Accepting Business at a Special Price Power Serve Company expects to operate at

Question

Accepting Business at a Special Price Power Serve Company expects to operate at 85% of productive capacity during July. The total manufacturing costs for Direct materials Direct labor Variable factory overhead Fixed factory overhead 1 or the production of 32300 bate es are budgeted as ilo s $384,400 141,300 39,550 79,000 Total manufacturing costs 5644,250 The company has an opportunity to submit a bid for 2,000 batteries to be delivered by July 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during July 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. per unit

Explanation / Answer

Calculate unit cost :

17.50 per unit

Direct material 384400 Direct labour 141300 Variable overhead 39550 Total production cost 565250 Unit 32300 Unit cost 17.50

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