Question

Eddy Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.
Production volume 6,000 units 7,000 units
Direct materials $582,600 $679,700
Direct labor $136,200 $158,900
Manufacturing overhead $691,800 $714,700

The best estimate of the total variable manufacturing cost per unit is:

A) $97.10
B) $119.80
C) $142.70
D) $22.90

Answer 1

Answer:

variable manufacturing cost per unit = $142.70

so correct option is C) $142.70

Step-by-step explanation:

solution

we get here first direct materials cost per unit that is express as

direct materials cost per unit = Change in cost ÷ Change in activity   .......1

put here value

direct materials cost per unit = $\frac{679700-582600}{7000-6000}$

direct materials cost per unit  = $97.10 per unit  

and now we get here direct labor cost per unit that is

Direct labor cost per unit = Change in cost ÷ Change in activity   ........2

Direct labor cost per unit = $\frac{158900-136200}{7000-6000}$

Direct labor cost per unit = $22.70 per unit

and

now we get variable manufacturing overhead per unit that is

variable manufacturing overhead per unit = Change in cost ÷ Change in activity  .........3

variable manufacturing overhead per unit = $\frac{714700-691800}{7000-6000}$

variable manufacturing overhead per unit = $22.90 per unit  

so that  total variable manufacturing cost per unit will be

total variable manufacturing cost per unit = 22.90 + $22.70 + $97.10 total variable manufacturing cost per unit = $142.70

so correct option is C) $142.70