EX 24-14 Accepting business at a special price Portable Power Company expects to

Question

EX 24-14 Accepting business at a special price

Portable Power Company expects to operate at %80 pf productive capacity during July. The total manufacturing cost for July for the production of 25,000 batteries are budgeted as follows:

The company has an opportunity to submit a bid for 2,500 batteries to be delivered by July 31 to a government agency. If the contract is obtained, it is anticipated the additional activity will no interfere with normal production during July or increase the selling and administrative expenses. What is the unit cost below which Portable Power Company should not go in biding the government contract?

Explanation / Answer

Unit cost below which Portable Power Company should not go in biding the government contract

=manufacture cost / 2500 batteries

= unit cost per battery

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