Answer:
The unit cost below which Box Elder Power Company should not go in bidding on the government contract is $9.30
Explanation:
Box Elder power company produced 40,000 batteries in the month of May
Total Direct materials = $240,000
Total Direct labor = 100,000
Total Variable factory overhead = 32,000
Total Fixed factory overhead = 150,000
Total manufacturing costs = $522,000
So only relevant costs are:-
Direct Material per unit = $240,000 ÷ 40,000 = $6
0
Direct Labor per unit = $100,000 ÷ 40,000 = $2.5
0
Variable Factory OH per unit = $32,000 ÷ 40,000 = $0.8
0
Therefore total overhead = $9.3
0
