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# portable power company expects to operate at 80- of productive capacit.docx

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# portable power company expects to operate at 80- of productive capacit.docx

portable power company expects to operate at 80% of productive capacity during july. the total manufacturing costs for july for the production of 25,000 batteries are budgeted as follows:
direct materialÂ Â  162,500
direct laborÂ Â Â  70,000
variable factory overheadÂ Â  30,000
fixed factory overheadÂ Â Â  112,500
total manufacturing costsÂ Â Â  375,000
the company has an opportunity to submit a bid for 2,500 batteries t be delivered by july 31 to a government agency. if the contract is obtained it is anticapated 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 portable power company should not go in bidding on the government cntract?
Solution
The per unit bid should not be less than \$ 10.5 & the total amount of bid will not be less than \$ 26250/-

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portable power company expects to operate at 80% of productive capacity during july. the total manufacturing costs for july for the production of 25,000 batteries are budgeted as follows:
direct materialÂ Â  162,500
direct laborÂ Â Â  70,000
variable factory overheadÂ Â  30,000
fixed factory overheadÂ Â Â  112,500
total manufacturing costsÂ Â Â  375,000
the company has an opportunity to submit a bid for 2,500 batteries t be delivered by july 31 to a government agency. if the contract is obtained it is anticapated 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 portable power company should not go in bidding on the government cntract?
Solution
The per unit bid should not be less than \$ 10.5 & the total amount of bid will not be less than \$ 26250/-

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### portable power company expects to operate at 80- of productive capacit.docx

1. 1. portable power company expects to operate at 80% of productive capacity during july. the total manufacturing costs for july for the production of 25,000 batteries are budgeted as follows: direct materialÂ Â 162,500 direct laborÂ Â Â 70,000 variable factory overheadÂ Â 30,000 fixed factory overheadÂ Â Â 112,500 total manufacturing costsÂ Â Â 375,000 the company has an opportunity to submit a bid for 2,500 batteries t be delivered by july 31 to a government agency. if the contract is obtained it is anticapated 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 portable power company should not go in bidding on the government cntract? Solution The per unit bid should not be less than \$ 10.5 & the total amount of bid will not be less than \$ 26250/- Particulars Total Per Unit Cost Direct Material 162500/25000 6.5 Direct labour 70000/25000 2.8 Variable Factory Overheads 30000/25000 1.2 Total 10.5 Total Bid 2500*10.5 26250