What is the unit cost

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Reference no: EM133019372

Problem - Accepting Business at a Special Price - Power Serve Company expects to operate at 85% of productive capacity during May. The total manufacturing costs for May for the production of 28,900 batteries are budgeted as follows:

Direct materials $418,600

Direct labor 153,900

Variable factory overhead 43,070

Fixed factory overhead 86,000

Total manufacturing costs $701,570

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.

Required - What is the unit cost below which Power Serve Company should not go in bidding on the government contract?

Reference no: EM133019372

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