Accepting Business at a Special Price Forever Ready 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 $439,400 Direct labor 161,600 Variable factory overhead 45,242 Fixed factory overhead 90,000 Total manufacturing costs $736,242 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 Forever Ready Company should not go in bidding on the government contract? Round your answer to two decimal places. per unit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Accepting Business at a Special Price
Forever Ready 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
$439,400
Direct labor
161,600
Variable factory overhead
45,242
Fixed factory overhead
90,000
Total manufacturing costs
$736,242
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 Forever Ready Company should not go in bidding
on the government contract? Round your answer to two decimal places.
per unit
Transcribed Image Text:Accepting Business at a Special Price Forever Ready 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 $439,400 Direct labor 161,600 Variable factory overhead 45,242 Fixed factory overhead 90,000 Total manufacturing costs $736,242 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 Forever Ready Company should not go in bidding on the government contract? Round your answer to two decimal places. per unit
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