Genesis Company expects to operate at 90% of productive capacity during May. The total manufacturing costs for May for the production of 20,000 batteries are budgeted as follows:
Direct materials ......... $242,000
Direct labor ............ 85,000
Variable factory overhead ..... 29,000
Fixed factory overhead ....... 60,000
Total manufacturing costs ....... $416,000
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
Genesis Company should not go in bidding on the government contract?