• Power Serve Company expects to operate at 90% of productive capacity during July. The total manufacturing costs for July for the production of 38,700 batteries are budgeted as follows:

Direct materials $407,900

Direct labor 150,000

Variable factory overhead 41,950

Fixed factory overhead 84,000

Total manufacturing costs$683,850

The company has an opportunity to submit a bid for 2,000 batteries to be delivered by July 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during July 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

• Homestead Jeans Co. has an annual plant capacity of 63,000 units, and current production is 45,200 units. Monthly fixed costs are $41,900, and variable costs are $25 per unit. The present selling price is $38 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 15,900 units of the product at $27 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co.

a.Make adifferential analysisdated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis

Reject Order (Alt. 1) or Accept Order (Alt. 2)

November 12

Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2)

Revenues $ $ $

Costs:

Variable manufacturing costs

Income (Loss) $ $ $

b.What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.

• Calgary Lumber Company incurs a cost of $376 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $558 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $530 per hbf, which can be sold for $750 per hbf.

a.Do adifferential analysisdated March 15, on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Differential Analysis

Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)

March 15

Sell-Rough-Cut (Alternative 1) Process Furtherinto Finished-Cut (Alternative 2) Differential Effect on Income(Alternative 2)

Revenues, per unit $ $ $

Costs, per unit

Income (Loss), per unit $ $ $