Jupiter Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 25,000 batteries are budgeted as follows:
|
Direct materials |
$272,000 |
|
Direct labor |
96,000 |
|
Variable factory overhead |
32,000 |
|
Fixed factory overhead |
54,000 |
|
Total manufacturing costs |
$454,000 |
The company has an opportunity to submit a bid for 1,000 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 Jupiter Company should not go in bidding on the government contract?