Power Serve Company expects to operate at 82% of productive capacity during May. The total manufacturing costs for May for the production of 35,260 batteries are budgeted as follows: Direct materials $376,400 Direct labor 138,400 Variable factory overhead 38,782 Fixed factory overhead 78,000 Total manufacturing costs $631,582 The company has an opportunity to submit a bid for 3,000 batteries to be delivered by May 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during May or increase the selling or administrative expenses. What is the unit cost below which Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.$ per unit
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Power Serve Company expects to operate at 82% of productive capacity during May. The total
| Direct materials | $376,400 |
| Direct labor | 138,400 |
| Variable factory overhead | 38,782 |
| Fixed factory overhead | 78,000 |
| Total manufacturing costs | $631,582 |
The company has an opportunity to submit a bid for 3,000 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 Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.
$ per unit
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