Problem
The company has an opportunity to submit a bid for 2,000 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.
a. What is the April budgeted cost per battery for the production of 36,960 batteries?
b. What is the unit cost below which Power Serve Company should not go in bidding on the government contract?