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Question: Accepting Business at a Special Price Power Serve Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 39,600 batteries are budgeted as follows:

Direct materials $519,700

Direct labor 191,100

Variable factory overhead 53,480

Fixed factory overhead 107,000

Total manufacturing costs $871,280

The company has an opportunity to submit a bid for 2,000 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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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92760763

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