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 Direct labor Variable factory overhead Fixed factory overhead $471,200 173,300 48,500 97,000 Total manufacturing costs $790,000 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
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 Direct labor Variable factory overhead Fixed factory overhead $471,200 173,300 48,500 97,000 Total manufacturing costs $790,000 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
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text: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
Direct labor
Variable factory overhead
Fixed factory overhead
$471,200
173,300
48,500
97,000
Total manufacturing costs
$790,000
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
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