(Answered) Question - forever ready company expects to operate at 82

Accounting

Question - Forever Ready Company expects to operate at 82% of productive capacity during May. The total manufacturing costs for May for the production of 36,900 batteries are budgeted as follows:

Direct materials $286,000

Direct labor 105,200

Variable factory overhead 29,460

Fixed factory overhead 59,000

Total manufacturing costs $479,660

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.

Required - What is the unit cost below which Forever Ready Company should not go in bidding on the government contract?

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