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What is the unit cost below which forever ready company

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Reference no: EM132529107

Accepting Business at a Special Price

Forever Ready Company expects to operate at 90% of productive capacity during July. The total manufacturing costs for July for the production of 33,300 batteries are budgeted as follows:

Direct materials $428,000

Direct labor 157,300

Variable factory overhead 44,070

Fixed factory overhead 88,000

Total manufacturing costs $717,370

The company has an opportunity to submit a bid for 2,000 batteries to be delivered by July 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during July or increase the selling or administrative expenses.

Question 1: What is the unit cost below which Forever Ready Company should not go in bidding on the government contract?

Reference no: EM132529107

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