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$376,400Direct labor138,400Variable factory overhead38,782Fixed factory overhead78,000Total manufacturing costs$631,582The company has an opportunity to submit a bid for 3,000 batteries to be delivered by May 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during May or increase the selling or administrative expenses.What is the unit cost below which Power Serve Company should not go in bidding on the government contract? Round your answer to two decimal places.$ per unit

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Asked Dec 1, 2019
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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

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Total Variable Manufacturing cost is the summation of the direct material, direct labour and variable factory overhead. The direct material cost is $...

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Direct material cost + Direct labor cost Total variable manufacturing cost = Variable factory overhead $376,400 $138,400+ $38,782 = $553,582

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