Accepting Business at a Special Price

Palomar Battery Company expects to operate at 88% of full capacity during April. The total manufacturing costs for April for the production of 39,600 batteries are budgeted as follows:

Direct materials	$624,700
Direct labor	229,700
Variable factory overhead	64,320
Fixed factory overhead	114,840
Total manufacturing costs	$1,033,560

The company has an opportunity to submit a bid for 2,000 batteries to be delivered by April 30 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during April or increase the selling or administrative expenses.

Round your answers to the nearest cent.

a. What is the April budgeted cost per battery for the production of 39,600 batteries? $ per battery

b.What is the unit cost below which Palomar Battery Company should not go in bidding on the government contract? $ per unit