Accepting Business at a Special Price

Power Serve Company expects to operate at $82\%$ of productive capacity during May. The total manufacturing costs for May for the production of $31,980$ batteries are budgeted as follows:

Line Item Description Amount

Direct materials $$458,800$

Direct labor $168,700$

Variable factory overhead $47,278$

Fixed factory overhead $94,000$

Total manufacturing costs $$768,778$

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.

fill in the blank $1$ of $1$$

per unit

Feedback Area

Feedback

Divide the variable cost by the number of batteries budgeted for production.