Accepting Business at a Special Price

Palomar Battery Company expects to operate at 85% of full capacity during April. The total manufacturing costs for April for the production of 38,250 batteries are budgeted as follows:

Line Item Description	Amount
Direct materials	$590,400
Direct labor	217,100
Variable factory overhead	60,775
Fixed factory overhead	110,925
Total manufacturing costs	$979,200

The company has an opportunity to submit a bid for 3,000 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 38,250 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