Accepting Business at a Special Price Forever Ready Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 32,400 batteries are budgeted as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total manufacturing costs $508,900 187,100 52,440, per unit 105,000 $853,440 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 Forever Ready Company should not go in bidding on the government contract? Round your answer to two decimal places.
Accepting Business at a Special Price Forever Ready Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 32,400 batteries are budgeted as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total manufacturing costs $508,900 187,100 52,440, per unit 105,000 $853,440 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 Forever Ready Company should not go in bidding on the government contract? Round your answer to two decimal places.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Accepting Business at a Special Price
Forever Ready Company expects to operate at 90% of productive capacity during
May. The total manufacturing costs for May for the production of 32,400
batteries are budgeted as follows:
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead
Total manufacturing costs
$508,900
187,100
52,440,
per unit
105,000
$853,440
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 Forever Ready Company should not go in
bidding on the government contract? Round your answer to two decimal
places.
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