Forever Ready Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 35,100 batteries are budgeted as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total manufacturing costs $272,100 100,000 28,040 56,000 $456,140 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. per unit

Forever Ready Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 35,100 batteries are budgeted as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total manufacturing costs $272,100 100,000 28,040 56,000 $456,140 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. per unit

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Description: **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 35,100 batteries are budgeted as follows:- **Direct materials:**

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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**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 35,100 batteries are budgeted as follows:

- **Direct materials:** $272,100
- **Direct labor:** $100,000
- **Variable factory overhead:** $28,040
- **Fixed factory overhead:** $56,000

**Total manufacturing costs: $456,140**

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.

**Question:** 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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