Required information

Skip to question

[The following information applies to the questions displayed below.] North American Pharmaceuticals, Inc., specializes in packaging bulk drugs in standard dosages for local hospitals. The company has been in business for seven years and has been profitable since its second year of operation. Don Greenway, Assistant Controller, installed a standard costing system after joining the company three years ago. Wyant Memorial Hospital has asked North American Pharmaceuticals to bid on the packaging of three million doses of medication at total cost plus a return on total cost of no more than 15 percent. Wyant defines total cost as including all variable costs of performing the service, a reasonable amount of fixed overhead, and reasonable administrative costs. The hospital will supply all packaging materials and ingredients. Wyant has indicated that any bid over $0.05 per dose will be rejected. Greenway has accumulated the following information prior to the preparation of the bid.

Direct labor	$	26.00	per direct-labor hour (DLH)
Variable overhead	$	22.00	per DLH
Fixed overhead	$	30.00	per DLH
Incremental administrative costs	$	3,000	for the order
Production rate		3,000	doses per DLH

2. Calculate the bid price per dose using total cost and the maximum allowable return specified by Wyant Memorial Hospital. (Round your answer to 3 decimal places.)