Homework Answers
Since there is spare capacity, no additional fixed costs will be incurred on the order
Lowest bid is equal to the additional cost to be incurred for the units
= Direct material cost + Direct labor cost + Variable factory overhead cost
= (285000+104000+31000)*2000/30,000
= $28,000
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Power Serve Company expects to operate at 85% of productive capacity during April The total manufacturing...
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Accepting Business at a Special Price Power Serve Company expects to operate at 85% of productive capacity during July. The total manufacturing costs for July for the production of 33,150 batteries are budgeted as follows: Direct materials $523,000 Direct labor 192,300 53,780 Variable factory overhead Fixed factory overhead 108,000 Total manufacturing costs $877,080 The company has an opportunity to submit a bid for 2,000 batteries to be delivered by July 31 to a government agency. If the contract is obtained,...
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