Reference no: EM133050853
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?