Power Serve Company expects to operate at 85% of productive capacity during April The total manufacturing costs for April for the production of 30,000 batteries are budgeted as follows:

Direct materials $285,000

Direct labor 104,000

Variable factory overhead 31,000

Fixed factory overhead 58,000

Total manufacturing costs $478,000

The company has an opportunity to submit a bid for 2000 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.

Describe, in words, what the lowest bid should be and why. Include qualitative reasons as well as the quantitative reasons.

Then provide calculations.