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What is the unit cost

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Problem - Accepting business at a special price - Forever Ready Company expects to operate at 85% of productive capacity during May. The total manufacturing costs for May for the production of 25,000 batteries are budgeted as follows:

Direct materials $255,000

Direct labor 110,000

Variable factory overhead 35,000

Fixed factory overhead 57,000

Total manufacturing costs $457,000

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 Forever Ready Company should not go in bidding on the government contract?

Reference no: EM132687479

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