Which Power Serve Company should not go in bidding

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Question - Accepting Business at a Special Price - Power Serve Company expects to operate at 90% of productive capacity during July. The total manufacturing costs for July for the production of 34,200 batteries are budgeted as follows:

Direct materials $404,700

Direct labor 148,800

Variable factory overhead 41,580

Fixed factory overhead 83,000

Total manufacturing costs $678,080

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.

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

Reference no: EM133050853

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