Power Serve Company expects to operate at 88% of productive capacity during May. The total manufacturing costs for May for the production of 39,600 batteries are budgeted as follows: Direct materials $508,900 Direct labor 187,100 Variable factory overhead 52,440 Fixed factory overhead 105,000 Total manufacturing costs $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 Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.
Power Serve Company expects to operate at 88% of productive capacity during May. The total manufacturing costs for May for the production of 39,600 batteries are budgeted as follows: Direct materials $508,900 Direct labor 187,100 Variable factory overhead 52,440 Fixed factory overhead 105,000 Total manufacturing costs $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 Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accepting Business at a Special Price
Power Serve Company expects to operate at 88% of productive capacity during May. The total
| Direct materials | $508,900 |
| Direct labor | 187,100 |
| Variable factory |
52,440 |
| Fixed factory overhead | 105,000 |
| Total manufacturing costs | $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 Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.
$fill in the blank 1 per unit
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